The Securities and Exchange Board of India (SEBI), on 30 April 2024, has approved a new regulatory framework to boost participation from non-resident Indians (NRIs), overseas citizens of India (OCIs), and resident Indians (RIs) in foreign portfolio investors (FPIs) based in international financial services centres (IFSCs) in India. These centres are regulated by the International Financial Services Centres Authority.
“The flexibility for such increased participation shall be subject to certain conditions to manage regulatory risk,” said an announcement from the SEBI board meeting that approved the framework.
Previously, under the SEBI’s 2019 regulations, NRIs, OCIs and RIs could not directly apply to be FPIs and were limited in their contributions to FPIs. They could contribute less than 25% individually, and less than 50% collectively, of an FPI’s total funds, and they were barred from exercising control over FPIs.
Under the new framework, the SEBI allows 100% contribution from these investors in IFSC-based FPIs, provided they submit their permanent account number cards or other identification documents.
FPIs also have the option to not provide these documents if they meet specific conditions, such as having a regulated manager and diversified investor base. The SEBI has also mandated detailed ownership disclosures for certain FPIs to ensure transparency and regulatory compliance.
