Sebi relaxes FPI norms, allows off-market transfer of securities

While making relaxing the regulatory framework for foreign portfolio investors, the SEBI has simplified KYC requirements for them and permitted them to carry out off-market transfer of securities.

In addition, the regulator has broad-based the classification for foreign portfolio investors (FPIs) and simplified their registration process. The notification comes after the board of Sebi in August approved a proposal in order to simplify the regulatory norms for FPIs.

The new norms have been redrafted based on the recommendation of a committee headed by former RBI deputy governor H R Khan. Under the new regulations, FPIs would be classified into two categories instead of three.

Presently, SEBI has classified FPIs into three categories with the easier compliance norms for Category-I FPIs and the strictest for Category-III FPIs. The most well-regulated FPIs come under Category-I.

As per the new rule, the government and government-related investors such as central banks, sovereign wealth funds, international or multilateral organizations or agencies including entities controlled or at least 75% directly or indirectly owned by such government and government related investor; pension and university funds would fall under the Category-I FPIs.