SEBI Proposes FPI Framework Overhaul, Aiming To Streamline Registration Process & Introduce Abridged Application Option For Related Funds

New Delhi: Markets regulator Sebi on Friday proposed a comprehensive overhaul of the Foreign Portfolio Investor (FPI) framework, aiming to streamline the registration process and introduce an abridged application option for related funds.The proposal is aimed at enhancing ease of doing business and simplifying compliance requirements for global investors, the Securities and Exchange Board of India (Sebi) said in its consultation paper.

As part of this effort, Sebi has suggested a complete update and simplification of the Master Circular for FPIs and Designated Depository Participants (DDPs).The revised circular consolidates all rules, procedures, and circulars issued since May 2024 into a single, clearer document.

As per the consultation paper, the regulator has proposed introducing a simplified registration process for certain categories of FPIs, including funds managed by an investment manager already registered as an FPI, sub-funds of an existing master fund, segregated share classes, and insurance schemes linked to an already registered entity.Under the proposal, these applicants may either complete the entire Common Application Form (CAF) or use an abridged version that requires filling only the information unique to them, while the rest is auto-populated.

Custodians should obtain explicit consent to rely on existing information and ensure that unchanged details remain intact. Once the application is submitted, the custodian updates the CAF module and the DDP issues the Sebi-generated registration certificate after verifying eligibility, the regulator suggested.

The DDP should also conduct due-diligence, seek clarifications for incomplete forms, verify PAN details through the CAF portal and undertake checks related to the applicant's country of residence, regulatory status and other eligibility norms.

In addition to simplifying registration, Sebi has proposed clearer rules around KYC and beneficial-owner identification. The updated circular specifies requirements for NRIs, OCIs and resident Indians, and introduces dedicated frameworks for FPIs that exclusively invest in government securities, IFSC (based FPIs, banks, insurance entities, pension funds and funds with multiple investment managers).Also, the regulator has detailed procedures for renewal, surrender, transition, and reclassification of registrations, while also establishing uniform compliance and reporting standards for custodians and DDPs.Sebi has sought public comments till December 26 on the proposals. 

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