In a move to avoid participatory notes, markets regulator Sebi is likely to relax entry norms for foreign portfolio investors (FPIs) willing to invest in the Indian markets, senior officials told PTI. It may ease some rules, including expanding the eligible jurisdictions for registration by including countries with diplomatic tie-ups with India, the PTI report added. Besides, the regulator may rationalise “fit and proper” criteria for FPIs as well as simplify broad-based requirements for such investors. In addition, Sebi may allow listing of security receipts issued by an asset reconstruction company (ARC) on the exchange platform.
Security receipt, in market parlance, means a receipt or other security issued by a securitisation company or reconstruction company.This will enhance capital flows into the securitisation industry and particularly be helpful to deal with bank non-performing assets (NPAs). These proposals would be discussed at the board meeting of Securities and Exchange Board of India (Sebi) tomorrow. According to the new proposal, more jurisdictions such as Canada would be able to access the market due to change in FPI Regulations. Category I and II FPIs, which are essentially government and regulated entities, should not need any additional documentation and procedural requirements. However, Category III FPIs should continue to be subject to such requirements. In a major revamp, Sebi in 2014 had released norms that had clubbed different categories of foreign investors into a new class called FPIs. Under the regime, FPIs have been divided into three categories as per their risk profile and the KYC (know your client) requirements, while other registration procedures have been made simpler for them. Further, rationale of broad-based criteria may be extended in other cases wherein the applicant funds have other institutional investors — sovereign wealth fund, insurance/reinsurance companies, pension funds, Exchange Traded Funds (ETFs) as their underlying investors.
With PTI inputs