Understanding SEBI FPI Cell

Understanding how important foreign portfolio investors (FPIs) are to the expansion of the economy, SEBI is updating its laws. This move by SEBI is aimed at drawing in more international money. SEBI's objective is to make India an attractive place to invest by reducing regulatory costs and streamlining registration procedures.

 

Streamlining FPI Operations

Speaking at the Financial 3.0 CII Summit, Narayan explained the various measures undertaken by SEBI to alter the strings of FPIs. One of the strategies for implementing this change is the creation of SEBI FPI cells, a group of officers that is involved in direct communication with FPIs. These cells are intended to act as reference points, hence handling registration concerns and fostering the participants’ perception of the Indian regulatory landscape.

 

Balancing Domestic vs Foreign Capital

There has been a boost in domestic investments, facilitated by an investment of ₹12.5 trillion in risk-oriented mutual fund schemes in the last five years. Narayan reiterated the requirement of high-quality foreign savings and pointed toward the fact it has stood at ₹3.5 trillion through FPIs.

Narayan also talked about SEBI’s recent circular, particularly on prescriptive risk-based disclosures by some FPIs, and how it has been implemented successfully. SEBI is considering the relaxation of certain rules regarding disclosure for FPIs such as those regulated under a transparent system like sovereign funds, government entities, and pension funds.

“These newly formed FPI cells have officers who reach out to FPIs directly. We have engaged with more than 500 FPIs through this initiative, informing them about the landscape in India and our regulatory outlook towards FPIs. This serves as a one-stop shop for any FPI dealing with registration or other issues,” Narayan stated.

It is anticipated that this program will bring substantial foreign investment to India's many industries ranging from education stocks to infrastructure stocks in India.

 

Ensuring Transparency and Efficiency

While the SEBI FPI cell is contemplating these reliefs, Narayan said that there would be continued stringent disclosure norms regarding ODIS and FPIs having separate streams. SEBI is examining these changes, Narayan reaffirmed that record disclosure necessities could be continued in ODIs and FPIs having different streams. The regulator is going through 3,300 comments in the consultation paper on this matter.

To address the issues faced in simplifying FPI registrations, SEBI is in the process of developing an integrated procedure for all custodians with an FPI registration application tracking system for FPIs investing exclusively in central government securities. Further, Narayan also shared that custodians or clearing banks are likely to provide funds to the FPIs from the next week on the day of the settlement after Sebi prompts them.

• IFSC-based FPIs: The FPIs undertaking business from IFSCs have the permission to pool funds from NRIs, OCIs, and RI up to 100% of their corpus.
• FPI Registration: From the details provided, SEBI is still in the process of harmonizing procedures with different custodians as well as establishing an application tracking system.
• Funds Availability: This means that custodians will have to ensure that the necessary funds are provided to the FPIs on the day of settlement.
• Operational Guidelines: SEBI, over the years, has developed Operational Guidelines for FPIs, Designated Depository Participants, and eligible foreign investors in 2019.

 

Conclusion

To ensure transparency, SEBI has enacted elaborate disclosure rules regarding the risk of some categories of FPIs. The goal of the SEBI FPI cells division is to simplify regulatory procedures, improve transparency, and expedite foreign investments. It is set to boost foreign investments in stocks in India, enhancing growth and development.