Sebi eases Foreign Portfolio Investors onboarding process

Foreign Portfolio

To make conducting business easier and cut down on the time required for registration, the markets’ regulatory body Sebi has streamlined the formalities for onboarding Foreign Portfolio Investors (FPIs).

According to a circular released on Monday, the regulator permitted designated depository participants (DDPs) to award FPI registration on the basis of scanned copies of application forms and supporting documentation.

Registration on the basis of scanned copies has been permitted, but trade can only be activated after the physical documents have been verified, it said.

Currently, in order to get the FPI registration, applicants must provide both scanned copies and physical copies of their application forms and supporting papers to the DDPs.

The Securities and Exchange Board of India (SEBI) has additionally permitted DDPs to accept FPIs’ use of digital signatures for the execution of documents pertaining to registration.

Also, the regulator has approved DDPs’ use of the Common Application Form (CAF) module included on the depositories’ websites to verify PAN. Presently, only after getting a hard copy of the PAN from the application, can DDPs validate the PAN.

The SWIFT system can be used by authorised bank employees to certify copies of original papers given by FPIs, according to Sebi. This will help cut down on the physical movement of documents and the time required for registration, it said.

According to the Sebi, these actions are intended to speed up the onboarding process for FPIs and shorten the time needed to grant registration, as well as to open demat, trading, and bank accounts for FPIs.

According to Sebi, if an FPI applicant is a member of an existing FPI investor group, it may provide its specific FPI investor group ID in the CAF without than providing comprehensive information about every group member for operational convenience.

According to the statement, if the applicant wants to include other FPIs (apart from itself) in the investor group ID, they merely need to provide their information together with the investor group ID.

At the time of registration, an FPI applicant must currently list any FPIs with which it shares common control or ownership of more than 50%. For each of these FPI investor groups, depositories create a special FPI investor group ID.

The circular, which would be effective immediately, was issued after the Sebi board decided to simplify certain of the administrative procedures for onboarding FPIs at its meeting in December 2022.

Sebi established strict guidelines for FPIs earlier this month, requiring them to disclose any major changes to their ownership and organisational structure within seven working days.

The regulator has the right to request any supplementary paperwork in relation to new FPI registrations.