New Delhi: Making it easier for overseas entities to invest in Indian markets, Sebi has proposed grant of registration to them within 10 days of application under the new Foreign Portfolio Investor (FPI) regime.
The FPIs would be allowed to invest across a host of the capital market segments, including in shares, debentures, warrants, mutual funds, collective investment schemes, derivatives, treasury bills and government securities.
Besides, they can also invest in the commercial papers, security receipts of asset reconstruction companies, perpetual debt instruments, non-convertible debentures, infrastructure debt funds and Indian Depository Receipts.
However, one FPI can hold a maximum of 10 per cent equity shares in a company, subject to the applicable sectoral caps.
Under the proposed FPI Regulations, which were approved by Sebi's board yesterday and would be notified soon, various investor classes like FIIs (Foreign Institutional Investors) and QFIs (Qualified Foreign Investors) would be clubbed into one single category to be known as FPIs.
To make it easier for FPIs to invest in Indian markets, the new norms also provide for a permanent registration to them, while Sebi has also exempted the lowest-risk foreign investors (such as government entities, sovereign funds and multilateral agencies) from any registration fees.
The new norms come at a time when concerns are being raised about flight of overseas funds away from Indian markets, which was known as among the most attractive investment destinations across the world till a few years ago.
The regulations governing foreign investors have been streamlined to make Indian market a more attractive investment destination and include easier entry norms and cost-effective operational framework for the foreign entities.
As per the draft FPI Regulations, 2013, the FPIs would need to apply for registration through Designated Depository Participants (DDPs), which would need to dispose of the application within ten days of its receipt.
In case of additional information being sought for the registration, the application would be required to be disposed of within 10 days of such details being furnished.
The applicants can approach Sebi for any grievance with regard to their application, while they would be required to be given a "reasonable opportunity" to remove any deficiency found in their application before it being rejected.
An applicant can apply to Sebi for a reconsideration within 30 days of its application being rejected.
The draft norms also stipulate that FPIs would need to transact in securities only through registered stock brokers, except for transactions in securities governed by RBI regulations (such as government bonds), open offers, buyback or delisting offers and divestment of shares.
