The market regulator Securities and Exchange Board of India (Sebi) will soon notify rules to ease investment by foreign bodies in Indian markets. This was decided by its board on Thursday in New Delhi.
Sebi is creating a new class of investors — to be called Foreign Portfolio Investors (FPIs) — and would classify them in three categories as per their risk profile, senior officials said. The know your client (KYC) and other regulatory compliance requirements for the FPIs would depend on their risk category and the norms would be easier for lower-risk investors.
This follows finalisation of necessary regulatory changes by the government for a major overhaul of the existing regulations for overseas investments.
The proposals are based on former cabinet secretary KM Chandrasekhar-led committee report, and were approved by Sebi in its board meeting in the end of June.
Thereafter, the regulator referred these recommendations to the government for implementation.
Sebi is merging different classes of investors such as FIIs (foreign institutional investors), their sub-accounts and Qualified Foreign Investors (QFIs) into the new category that it has called FPIs, in order to put in place a simplified and uniform set of entry norms for these investors.
These measures that Sebi will undertake come at a time when concerns are being raised about outflows of foreign capital and the weakening of the rupee against the dollar and other foreign currencies.
The new norms are expected to make it much easier for the foreign investors to enter the country and make investment decisions.