Brickwork Ratings welcomes easing requirement for FPIs, says more steps may be needed

Credit rating agency Brickwork welcomed the recent relaxation of requirements for FPIs but said it needs to be watched if that will raise foreign investments in the country as these are primarily driven by interest rates differential among various countries.

In the board meeting on Wednesday, Sebi announced easing of the regulatory framework for foreign portfolio investors (FPIs) and simplified KYC requirements for them and permitted them to carry out off-market transfer of securities.

"Simplification of procedure for FPI is welcome, however, we need to watch if this will materially push up such investments as these are primarily driven by interest rate differential between other well-regulated countries and India with respect to debt instruments and expected earnings in equity investments," said Balkrishna Piparaiya, senior director, Brickwork Ratings.

"With Indian debt yields still being relatively higher compare to other countries, FPI investments may continue to grow and the simplification in procedure may neutralise the impact of recent downward trend in yields," Piparaiya said