SEBI Eases FPI Norms To Boost Investment

These updates, coupled with India’s rising equity trading volumes, are expected to drive sustained foreign participation and market resilience. As market experts note, ongoing regulatory evolution is vital to fostering a healthy and thriving securities ecosystem

The Securities and Exchange Board of India (SEBI) has made several significant announcements and updates to its norms, based on the latest available information. These updates stem from recent SEBI board meeting, marking the first under the new chairperson, Tuhin Kanta Pandey.

Talking o Bizz Buzz, Dhananjay Sinha, a market analyst, said, “The intent is clearly to ease the regulatory framework to improve Foreign Portfolio Investment (FPI) participation in Indian equities.”

The move to ease the compliance burden on smaller FPIs along with attempts to enhance disclosure norms of senior management of companies and improve market infra institutions are geared towards greater transparency and confidence, he said.

Here’s a summary of the key developments

SEBI has approved the formation of a high-level committee to overhaul its conflict-of-interest and disclosure rules for board members and staff, including the chairperson. This review aims to update the outdated 2008 guidelines, focusing on regulations governing property, investments, and liabilities. The move is intended to enhance trust and transparency in the regulatory framework.

SEBI has raised the threshold for granular ownership disclosures by Foreign Portfolio Investors (FPIs) from Rs 25,000 crore to Rs 50,000 crore in equity Assets Under Management (AUM). This change, reduces the compliance burden for smaller foreign investors while maintaining oversight on larger ones, potentially boosting foreign investment and market liquidity.

Updates to the regulations governing MIIs were discussed, though specific details remain broad. These changes are part of SEBI’s broader priority to build trust and transparency, as emphasized by Chairperson Pandey.

These updates reflect SEBI’s ongoing efforts to balance regulatory oversight with ease of doing business, aligning with market growth and investor needs. For instance, the FPI threshold adjustment accounts for the doubling of cash equity market trading volumes between FY 2022-23 and FY25.

A market analyst, on condition of not being quoted, said, “Sebi job is investor protection and market regulation coupled with development of securities market.”

All these are positive developments and will lead to positive impact on markets in longer term with an upward bias in markets, he said. Regular reforms and changes are necessary for healthy markets.