New Delhi, Aug 01 : Market regulator Securities and Exchange Board of India (SEBI) might ease categorisation norms for foreign portfolio investors (FPIs).
The proposal was discussed at a meeting between SEBI officials and members of a committee on easing of FPI regulations, sources told The Economic Times.
At present, sovereign entities are classified as category-I FPIs, category-II comprises regulated funds, while category-III FPIs include unregulated entities such as individuals and family offices.
The plan will help pension funds, charity funds and family-led offices of non-resident Indians (NRIs) obtain licences that will ease their compliance burden.
SEBI has asked the committee to submit a supplementary report recommending further FPI reforms, the report said.
Moneycontrol could not independently verify the news.
SEBI has so far not responded to a request for comment by The Economic Times.
“It has been a longstanding demand to accord category-I status to pension funds since they are usually government bodies,” a source told the publication.
Pension funds have so far not been put under category-I because a fund has to have majority-ownership by a foreign government to qualify as a sovereign fund.
“The idea is to go beyond the broad categorisation of FPIs based on risk profiles and provide incentives to funds that bring stable flows into the country,” a member of the committee told the paper. Such a move would bring pension funds down to the lowest risk category.
The committee, led by former RBI deputy governor HR Khan, was dissolved in June.
Category-I entities have fewer compliance norms than category-III FPIs. For instance, they are exempt from some KYC documentation requirements. Category-III FPIs are required to disclose their ultimate beneficiary owners, which is also not mandatory for category-I entities.
