The Securities and Exchange Board of India (SEBI) is set to make significant changes in regulations for Foreign Portfolio Investors (FPIs). These include simplifying the registration process for FPIs investing in government securities and raising the threshold for equity disclosures to ₹50,000 crore, double the current limit of ₹25,000 crore.

Easing FPI Registration for Government Securities

SEBI has announced that FPIs looking to invest exclusively in government-backed securities will face fewer registration requirements. SEBI will only request information mandated by authorities like the Reserve Bank of India (RBI) and the Central Board of Direct Taxes (CBDT).

SEBI’s whole-time member, Ananth Narayan G., clarified that FPIs focusing solely on government bonds won’t need to submit data such as investor group information or concentrated security holdings. This step aims to reduce compliance hurdles and encourage investments in government securities.

Higher Equity Disclosure Threshold

SEBI has also proposed increasing the threshold for FPIs to provide granular disclosures from ₹25,000 crore to ₹50,000 crore in equity assets under management (AUM). The decision reflects the sharp increase in daily market turnover, which has surged by 122% from FY 2022-23 to FY 2024-25.

Key Objectives of the Proposal

The revised threshold aims to:

Improve market transparency.
Prevent circumvention of regulations like Press Note 3 (PN3) and minimum public shareholding (MPS) norms.
Align regulatory practices with the rising market volumes.

Detailed Disclosure Requirements

Under SEBI’s August 2023 circular, FPIs meeting specific criteria were required to disclose detailed ownership and economic interest information. These criteria included:

Holding more than 50% of Indian equity AUM in a single corporate group.
Having equity AUM exceeding ₹25,000 crore.

With the new proposal, this threshold will increase to ₹50,000 crore, ensuring continued compliance amidst growing market volumes.

Impact on Offshore Derivative Instruments (ODIs)

The additional disclosure framework will also cover offshore derivative instruments (ODIs) and segregated portfolios, ensuring comprehensive tracking of equity holdings across FPIs and ODIs.

Public Consultation

SEBI has invited public comments on these proposed changes, with submissions open until 31 January 2025.

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