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Sebi panel proposes ways to ease FPI regulations

The panel was constituted to consolidate and rationalise the FPI framework.|
May 24, 2019, 09.09 PM IST
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With a view to tap foreign savings to meet liquidity and investment needs, a Sebi-constituted working group Chaired by H R Khan, former deputy governor of the RBI, on Friday suggested ways to ease FPI regulations in the country.

The panel was constituted to consolidate and rationalise the FPI framework.

“Flows of overseas funds both through the FPI and the Foreign Direct Investment (FDI) routes have been significant with record inflows into capital markets in India in recent years. As a key source of capital to the Indian economy, it is important to ensure a harmonized and hassle free investment experience for international investors and improve transparency as economic regulations evolve,” the report of the panel said.

Key recommendations proposed by the working group are as follows:

  1. Fast track on-boarding process for select Category II FPIs
  2. Simplified registration for Multiple Investment Manager (MIM) structures
  3. Pension fund to be considered for Category I FPI registration
  4. Review of broad based condition for appropriately regulated entities
  5. Deemed broad based status for insurance/ re-insurance entities
  6. Entities majorly owned by investors eligible for Category I FPI registration shall be deemed as Category I FPI
  7. Certain entities owned by Category II eligible investors shall be eligible for Category II FPI registration
  8. Simplified registration requirement for Category III FPIs
  9. Removal of ‘opaque structure” definition
  10. Separate registration for sub-funds of a fund with segregated portfolio
  11. KYC Reliance on same group regulated entity of custodian for non-PAN documents
  12. Liberalized investment cap
  13. Review of prohibited sector for foreign investment for FPIs
  14. Review of restriction on Sovereign Wealth Funds for investment in corporate debt securities
  15. Liberalization for regulated Category III FPIs
  16. Permitting FPIs for off-market transactions
  17. Harmonization between investment restrictions in FPI regulations and FEMA 20(R).
  18. Reclassification of investment from FPI to FDI
  19. Alignment between FPI and AIF routes
  20. Strengthening of ODI framework
  21. Entities established in the IFSC be deemed to have met the jurisdiction criteria for FPIs.

The Sebi has invited for comments on the proposals till June 14, 2019.

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