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Informist, Thursday, Dec. 12, 2024

 

--SEBI Narayan:Aim to end SEBI-related compliance for FPIs' govt bond invest

--SEBI Narayan:Look to ease compliance burden for FPIs' invest in govt bonds

--SEBI Narayan: Intent is FPIs investing just in govt bonds need only RBI OK

 

By Krity Ambey

 

NEW DELHI – The Securities and Exchange Board of India is working to get rid of all its registration-related compliance that foreign portfolio investors must fulfil if they wish to exclusively invest in government securities, said Ananth Narayan G., the market regulator's whole-time member.

 

"The broad intent is (for FPIs) to not require anything besides what RBI (Reserve Bank of India) requires," Narayan told Informist on the sidelines of the Global Economic Policy Forum 2024, organised by the Confederation of Indian Industry. "For instance, we have something called an investor group concept to club positions across FPIs. That will not be required after that."

 

SEBI regulations dictate that multiple FPIs belonging to the same investor group be clubbed, with the applicable investment limit being that for a single FPI. This helps the regulator ensure the aggregate investment of the group does not exceed prescribed limits. When it comes to government securities, while limits on FPIs' investments are prescribed and monitored by the RBI, these foreign investors must disclose their investments to both the central bank and SEBI. While the RBI gets a daily transaction report, a monthly report is filed with the capital markets regulator, adding to FPIs' compliance burden.

 

Other regulations FPIs must comply with are also seen as being cumbersome and repetitive. For instance, a custodian bank must upload an FPI's Know-Your-Customer documentation to separate systems operated by RBI and SEBI. Commerce Minister Piyush Goyal had said last month that he would talk to Finance Minister Nirmala Sitharaman and the markets regulator to ease KYC norms for FPIs.

 

Narayan, who has previously said that SEBI was working to bring "light-touch" regulations for sovereign funds and FPIs interested in investing specifically in government bonds, said the markets regulator has constituted a special cell to consult foreign investors and custodians to ease the registration process. "It is an ongoing process. We are working on this," Narayan said. "It should happen soon."

 

Discussions to simplify compliance processes for FPIs investing in India have gained momentum after the inclusion of Indian government bonds in the global indices of J.P. Morgan in June. In 2025, government bonds will also be added to Bloomberg and FTSE Russel's indices.  End

 

Edited by Tanima Banerjee

 

 

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