Markets regulator Sebi has proposed a significant revamp of the Foreign Portfolio Investor (FPI) framework, releasing a detailed consultation paper that
aims to simplify registration, reduce duplication of filings, and create a faster route for related investment vehicles.
Streamlined registration, optional abridged application
At the centre of the reform is a plan to overhaul the FPI registration process. Sebi has suggested a new abridged application mechanism for specific categories of investors
— 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 entity that already holds an FPI licence.Also Read: Debate heats up over SEBI’s plan to tighten derivative access
Under this mechanism, applicants may either file the full Common Application Form (CAF) or choose a shorter version that captures only information unique to them. Custodians would be required to obtain explicit consent from applicants before relying on existing information, ensure accuracy of unchanged details, update the CAF module and facilitate issuance of the Sebi-generated registration certificate after verification.
Updated Master Circular for FPIs and DDPs
Sebi has also proposed a complete revision of the Master Circular applicable to FPIs and Designated Depository Participants (DDPs). The updated version consolidates all rules, procedures and circulars issued since May 2024 into a single document to reduce fragmentation and improve clarity.
The regulator has outlined specific responsibilities for DDPs, including due diligence checks, PAN verification through the CAF portal, review of incomplete applications and eligibility assessments based on regulatory status, country of residence and other norms.
KYC, beneficial ownership, and compliance reforms
The consultation paper also sets out clearer requirements for KYC and beneficial-owner identification. It proposes defined standards for NRIs, OCIs and resident Indians, in addition to dedicated frameworks for FPIs investing only in government securities, IFSC-based FPIs, banks, insurance companies, pension funds and funds that operate with multiple investment managers.
Also Read: SEBI may tighten access to derivatives trading with new suitability norms: Sources
The circular further lays out processes for renewal, surrender, transition and reclassification of registrations, while introducing uniform compliance and reporting requirements for custodians and DDPs.
Sebi has invited public comments on the proposed framework until December 26.
