The markets regulator Securities and Exchange Board of India (SEBI) on Friday published revised know-your-client (KYC) norms for foreign portfolio investors (FPI) providing relief to the foreign entities.
The SEBI also revised the eligibility norms for FPIs as it accepted the recommendations of the SEBI working group headed by former Deputy Governor of the Reserve Bank of India H.R. Khan.
“SEBI Board…has after considering the interim recommendations of SEBI Working Group…decided that beneficial ownership criteria in Prevention of Money-laundering (Maintenance of Records) Rules, 2005 should be made applicable for purpose of KYC and not for determining eligibility of FPIs,” a circular from the regulator said.
“The clubbing of investment limit for FPIs should not be done on the basis of beneficial owner (BO) as per PMLA rules,” it added.
Regarding KYC review, it said FPIs shall be subject to KYC review as and when there is any change in material information or disclosure.
“The KYC review (including change in BOs/ their holdings) should be done based on risk categorisation of FPIs. In case of Category II and Category III FPIs from high-risk jurisdictions, KYC review should be done on yearly basis.”
In the event of non-submission of KYC documents, if any, no further purchase transactions shall be permitted to such clients, the circular said.