Markets regulator SEBI announced on Friday a significant overhaul of the Foreign Portfolio Investor (FPI) framework aimed at simplifying the registration process and introducing an abridged application option for affiliated funds. This initiative is part of SEBI’s efforts to enhance business ease and simplify compliance requirements for global investors, according to its consultation paper.
SEBI proposes a complete update and simplification of the Master Circular for FPIs and Designated Depository Participants (DDPs). The updated circular is intended to consolidate all rules, procedures, and circulars issued since May 2024 into a clearer, single document.
Among the proposed changes, SEBI suggests a streamlined registration process for specific categories of FPIs, including funds managed by investment managers already registered as FPIs, sub-funds of existing master funds, segregated share classes, and insurance schemes linked to registered entities. Applicants in these categories may opt to complete either the entire Common Application Form (CAF) or an abridged version that auto-populates information already provided, requiring the submission of only unique details.
Custodians are expected to obtain explicit consent to rely on existing information and ensure that unchanged details remain consistent. After submission of the application, the custodian will update the CAF module, allowing the DDP to issue a SEBI-generated registration certificate upon verifying eligibility.
Moreover, the DDP is tasked with conducting due diligence, clarifying any incomplete forms, verifying PAN details through the CAF portal, and checking the applicant’s country of residence and regulatory status, among other eligibility criteria.
In addition to the streamlined registration process, SEBI has outlined clearer rules regarding Know Your Customer (KYC) and beneficial-owner identification. The revised circular specifies requirements for Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and resident Indians while introducing dedicated frameworks for FPIs that focus on government securities, International Financial Services Centre (IFSC)-based FPIs, banks, insurance entities, pension funds, and funds with multiple investment managers.
SEBI has also detailed procedures for the renewal, surrender, transition, and reclassification of registrations, establishing uniform compliance and reporting standards for custodians and DDPs. The regulator has invited public feedback on these proposals until December 26.
