SEBI extends time to implement FPI regulations to June 30, 2014
The market regulator, Securities and Exchange Board of India (SEBI) extended the time-frame for implementing new Foreign Portfolio Investor (FPI) regulations by three months to June 30, 2014.
About new FPI regulations
SEBI has divided FPIs into three categories as per their risk profile and the KYC (Know Your Client) requirements. The new FPI regime makes the KYC norms and other registration procedure much simpler as compared to existing process.
- Purpose: To make an easier registration process and operating framework for overseas entities seeking to invest in Indian capital markets.
- The new regulations will replace the existing SEBI norms for Foreign Institutional Investors (FIIs) and the new class of investors, FPIs, would encompass all FIIs, their sub-accounts and qualified foreign investors (QFIs).
- Designated Depository Participants (DDPs): Through which FPIs can apply for registration, may continue to open QFI accounts till May 31, 2014.
- Category I FPIs: It would enlist the the lowest risk entities including foreign governments and government related foreign investors.
- Category II FPIs: It would comprise of broad based funds, appropriately regulated entities, funds whose investment manager is appropriately regulated, university funds, university related endowments, pension funds etc.
- Category III FPIs: It would cover all others not eligible under the first two categories.
Note: FPIs will be granted permanent registration. At present, foreign investors are given only one year or five year approval to invest in the country. They will be permanent unless suspended or cancelled by the board or surrendered by the FPI.