Sebi extends timline to implement FPI regulations to June 30

Market regulator Sebi today extended the time-frame for implementing new Foreign Portfolio Investor (FPI) regulations by three months to June 30.

The new Foreign Portfolio Investor (FPI) regulations was put in place to make an easier registration process and operating framework for overseas entities seeking to invest in Indian capital markets.

The new regulations which will replace the existing Sebi norms for foreign institutional investors (FIIs) and the new class of investors, FPIs, would encompass all FIIs, their sub-accounts and qualified foreign investors (QFIs).

In a circular issued today, the regulator said that it "may continue to grant certificate of registration as a FII or sub-account under Sebi (FIIs) Regulations 1995 till March 31, 2014 which may be extended up to June 30, 2014 by the Board."

"The FPI regime shall commence with effect from June 1, 2014," the Securities and Exchange Board of India (Sebi) said.

The decision was taken as the market participants have informed Sebi that they were still in process of putting in place necessary systems and procedures to discharge their assigned role effectively and had sought an extension of time for implementation of the FPI regime.

Sebi said it would continue to accept all applications for registration of FIIs and Sub-accounts till May 31, 2014 provided these are complete in all respects. Also, it would accept applications for acknowledgement of fee, in respect of those FIIs and sub-accounts whose fee validity is expiring on or before September 30, 2014.

Designated Depository Participants (DDPs), through which FPIs can apply for registration, may continue to open QFI accounts till May 31, 2014.

Under the new norms, FPIs have been divided into three categories as per their risk profile and the KYC (know your client) requirements and other registration procedures would be much simpler for FPIs compared to current practices.

Sebi has decided to grant them a permanent registration, as against the current practice of granting approvals for one year or five years to the overseas entities seeking to invest in Indian markets. They will be permanent unless suspended or cancelled by the board or surrendered by the FPI.

The Category I FPIs, which would be the lowest risk entities, would include foreign governments and government related foreign investors.

Category II FPIs would include appropriately regulated broad-based funds, appropriately regulated entities, broad- based funds whose investment manager is appropriately regulated, university funds,university related endowments, pension funds, etc. The Category-III FPIs would include all others not eligible under the first two categories.