SEBI merges FIIs and QFIs into new FPIs category

Stock market regulator, the Securities Exchange Board of India (SEBI) announced Foreign Portfolio Investor (FPI) regulations aimed at wooing foreign investors. SEBI, through these new rules, intends to ease the registration process and operating framework for foreign investors. Under FPIs, SEBI has included all Foreign Institutional Investors (FII) and Qualified Foreign Investors (QFI).

What are the key features of the new FPI regime?

Under the new FPI regulations, SEBI has merged all existing FIIs and QFIs in the new FPIs class.

The FPI class will be divided in three categories as per their risk profile.

  1. Category I FPIs:  It would enlist the the lowest risk entities including foreign governments and government related foreign investors.
  2. Category II FPIs: It would comprise of broad based funds, appropriately regulated entities, funds whose investment manager is appropriately regulated, university funds, university related endowments, pension funds etc.
  3. Category III FPIs: It would cover all others not eligible under the first two categories
  • SEBI has also approved setting up ‘Designated Depository Participants (DDPs)’, which would register FPIs on behalf of the market regulator subject to compliance with KYC norms.
  • The new FPI regime makes the KYC norms and other registration procedure much simpler as compared to existing process.
  • FPIs will be granted permanent registration. Currently foreign investors are given only one year or five year approval to invest in the country.



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