SEBI simplifies norms for foreign investors GS: 3 EMPOWER IAS

SEBI simplifies norms for foreign investors

The Securities and Exchange Board of India (SEBI) has simplified the compliance and operational requirements for foreign portfolio investors (FPIs), to make the regulatory framework more investor friendly.

SEBI based on the recommendations of the H.R. Khan committee, eased several regulatory restrictions that are likely to make life easier for foreign portfolio investors (FPIs).
The financial markets regulator has simplified the registration process for FPIs by doing away with the broad-based eligibility criteria, which required a minimum of at least 20 investors in a foreign fund, and certain documentary requirements.

FPIs can now also engage in the off-market sale of their shares with fewer restrictions.
SEBI has allowed entities registered at an international financial services centre to be automatically classified as FPIs. This might help foreign investors bypass some of the restrictions.
Mutual funds with offshore funds too can invest in India as FPIs to avail certain tax benefits now.
Central banks that are not members of the Bank of International Settlements are also allowed to register as FPIs and invest in the country under the new norms.
Smart cities, along with other urban development agencies, will now be allowed to issue municipal bonds to raise funds for development
SEBI will examine various issues on 35% minimum public shareholding plan

The key focus of the proposed regulations is to simplify and rationalise the existing regulatory framework for foreign portfolio investors in terms of easing the operational constraints and compliance requirements.
The regulator has allowed central banks of countries that are not members of Bank for International Settlement (BIS) to register as FPIs in India since, as per SEBI, such entities are “relatively long term, low risk investors directly/indirectly managed by the government”.
SEBI has expressed concerns over the recent proposal of the government to increase the minimum threshold of public holding in listed companies from the current 25% to 35%.
The regulator has amended the Prohibition of Insider Trading Regulations to include a clause to reward whistle-blowers up to b91 crore if the information leads to a disgorgement order of at least b91 crore.
Large number of listed public sector undertakings are yet to comply with the 25% public holding norm and have been given time till August 2020 to comply and also that the primary market was not doing well currently.
The regulator has also brought in clauses to protect the informant from victimisation in the form of termination, suspension or demotion

SEBI’s liberalised norms for FPIs will make Indian markets attractive to foreign investors
These measures to cut red tape will help lower the regulatory burden on investors, globalise India’s financial markets, and aid the growth of the broader economy by increasing access to growth capital

The Securities and Exchange Board of India is the regulator for the securities market in India. It was established in 1988 and given statutory powers in 1992 through the SEBI Act, 1992.

Foreign portfolio investment (FPI) consists of securities and other financial assets held by investors in another country.
It does not provide the investor with direct ownership of a company's assets and is relatively liquid depending on the volatility of the market.
Along with foreign direct investment (FDI), FPI is one of the common ways to invest in an overseas economy.

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