FII regulations prescribed by SEBI and QFI framework prescribed by both SEBI and RBI would be required to be repealed and replaced by a new framework for FPIs; amendments in FEMA and SEBI (ICDR) Regulations
Driven by the rationale of having an integrated policy on foreign investments, SEBI vide Press Release (PR No. 99/2013) on 5 October, 2013 conveyed the approval of draft SEBI (Foreign Portfolio Investors) Regulations, 2013 (the draft Regulations) in the Board meeting of SEBI. The draft Regulations intend to merge all the existing FIIs, sub accounts and qualified foreign investors (QFIs) into a new investor class termed as “Foreign Portfolio Investor” (FPI). FPIs will be allowed to invest in all those securities, wherein foreign institutional investors (FIIs) are allowed to invest.
In his Union Budget Speech for 2013-14, P Chidambaram, the Finance Minister, quoted “There are many categories of foreign portfolio investors such as FIIs, sub-accounts, QFIs etc. and there are also different avenues and procedures for them. Designated depository participants, authorised by SEBI, will now be free to register different classes of portfolio investors, subject to compliance with KYC guidelines
SEBI will simplify the procedures and prescribe uniform registration and other norms for entry of foreign portfolio investors. SEBI will converge the different KYC norms and adopt a risk-based approach to KYC to make it easier for foreign investors such as central banks, sovereign wealth funds, university funds, pension funds etc. to invest in India”
The base of the draft Regulations has been (Foreign Institutional Investors) Regulations, 1995, QFIs framework and the recommendations of the “Committee on Rationalisation of Investment Routes and Monitoring of Foreign Portfolio Investments” (the Committee Report) dated 12 June, 2013.
Authorised dealer category-I authorised by Reserve Bank of India, depository participant and custodians registered with SEBI shall be authorised to as designated depository participants (DDPs). DDPs shall register FPIs on behalf of SEBI subject to compliance with KYC requirements. The registration certificate shall be permanent in nature unless it is suspended or cancelled by SEBI.
Though there is an integration of portfolio investors in to a single category called FPI’s, from KYC point of view, the Committee recommended for catergorisation of FPIs based on the perceived risk profile. Subsequently, SEBI vide CIR/MIRSD/07/2013, dated September 12, 2013 issued circular specifying KYC requirements for these categories:
Category I: Government and government related foreign investors such as foreign central banks, governmental agencies, sovereign wealth funds, international/ multilateral organisations/ agencies.
Category II: Appropriately regulated broad based funds such as mutual funds, investment trusts, insurance/reinsurance companies, other broad based funds etc.; Appropriately regulated entities such as banks, asset management companies, investment managers/ advisors, portfolio managers etc; broad based funds whose investment manager is appropriately regulated; university funds and pension funds; university related endowments already registered with SEBI as FII/sub account.
Category III: All other eligible foreign investors investing in India under PIS route not eligible under Category I and II such as endowments, charitable societies/ trust, foundations, corporate bodies, trusts, individuals, family offices etc.
All the FIIs and sub accounts may continue to buy, sell or otherwise deal in securities under the FPI regime. QFIs may continue to buy, sell or otherwise deal in securities till the period of one year from the date of notification of this regulation. In the meantime, they may obtain FPI registration through DDPs. Category I and category II FPIs will be allowed to issue, or otherwise deal in offshore derivative instruments (ODIs), directly or indirectly. However, the FPI needs to be satisfied that such ODIs are issued only to persons who are regulated by an appropriate foreign regulatory authority after ensuring compliance with ‘know your client’ norms.
The Committee report cited required amendments/ modifications that would be needed in the legal framework viz. FII regulations prescribed by SEBI and QFI framework prescribed by SEBI and the RBI would be required to be repealed and replaced by a new framework for FPIs; amendments in FEMA (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, SEBI (ICDR) Regulations, 2009 etc.
In view of the same, one may expect series of amendments coming in near future, along with issue of SEBI (Foreign Portfolio Investors) Regulations, 2013.
Madhya Pradesh government had ordered a judicial inquiry into the mishap which was a shocking re-run of the tragedy at the same site in 2006 when over 56 pilgrims were washed away
The death toll in the stampede during Navratri festivities near a temple in Madhya Pradesh’s Datia district on Monday climbed to 115 with a number of people who had carried away the bodies of their relatives turning up for autopsy.
The stampede that left over 100 injured, was triggered by rumours yesterday that a river bridge the devotees were crossing was about to collapse.
Deputy inspector general (DIG) DK Arya said a number of people, who had carried away the bodies of their near and dear ones, are now turning up for autopsy, which is mandatory for taking compensation.
The State Government had ordered a judicial inquiry into the mishap which was a shocking re-run of the tragedy at the same site in 2006 when over 56 pilgrims were washed away after water was released in the Sindh river from upstream.
After the 2006 tragedy, the State Government had constructed a bridge over the river but the mishap took place on it allegedly due to mismanagement of the crowd that had gathered in lakhs from the nearby districts and neighbouring Uttar Pradesh.
Datia district’s chief medical officer (CMO) RS Gupta said autopsies on 111 bodies had been conducted till morning.
Police had earlier said 89 people, including 31 women and 17 children, were killed in the mishap.
Arya, while noting that the death toll could go up, said over 100 people were also injured.
The festivities turned into a tragedy as devotees from Datia and neighbouring Uttar Pradesh thronged the Durga temple to offer prayers on the occasion of Navratri at Ratangarh, about 60km from the district headquarters and around 320km away from the State capital Bhopal.
Of the 16 IPOs, 15 were from the SME sector. The IPO of Just Dial was the only one from non-SME segment and accounted for 87% of the total mobilisation
Indian companies mopped up Rs1,050 crore through initial public offerings (IPOs) during the first half of FY2014, sharply up by 36% over the same period last fiscal.
According to Prime Database, a leading database on primary capital market, 16 companies collectively raised Rs1,050 crore via IPO during the six months to end-September.
In the first half of 2012-13, as many as 13 companies had raked in Rs772 crore capital through initial share sale.
Of the 16 IPOs, 15 were from the small and medium enterprise (SME) sector. There was only one non-SME IPO, (Just Dial that garnered Rs919 crore), which accounted for 87% of the total mobilisation.
Information technology sector led the space with three companies mopping up Rs1,927 crore, which is 29% of the total amount garnered.
Market experts attributed the reason for big companies avoiding the IPO route to rake in funds to an uncertain and volatile equity markets, coupled with a lack of appetite among retail investors.
Pranav Haldea, managing director of Prime Database said, “With the secondary market still being extremely volatile and overall lack of confidence, no immediate revival of the primary market is seen in balance part of the year... The biggest disappointment for the primary market has again been the lack of divestment by the Government”.