SEBI Backtracks on FPI Rules, To Allow NRIs and PIOs To Hold Non-controlling Stake
After facing a backlash from foreign funds' lobby group, market regulator Securities and Exchange Board (SEBI) has radically changed its course on banning non-resident Indians (NRIs) and persons of Indian origin (PIOs) from owning foreign portfolio investment (FPI) vehicle or structure. SEBI may allow NRIs and PIOs to hold 25% as a single beneficiary and up to 50% as a group in an FPI.
In April this year, SEBI had banned NRIs and PIOs from being beneficial owners (BOs) of an FPI, giving them six months to make the changes.
The HR Khan Committee suggestions were made in response to the strong objections raised by the Asset Management Roundtable of Indian (AMRI) to the SEBI circular issued on 10 April 2018 which effectively placed a blanket ban on investments through certain FPIs.
On Saturday, the Khan Committee recommended some changes in the norms in know-your-customer (KYC) guidelines for NRI and PIOs. The Committee was set up by SEBI to review the FPI rules. The Committee met last week against the backdrop of a sharp fall in market indices. The market was supposedly rattled by the new rules that would be applicable to the FPIs from December,...