Sebi board relaxes norms for clubbing of investment limits for well-regulated FPIs

Markets regulator Sebi Wednesday decided to relax its norms for clubbing of investment limits for well-regulated foreign portfolio investors (FPIs).

Currently, FPIs are treated as part of the same investor group and the investment limits of all such entities are clubbed for deriving the investment limit as applicable to a single FPI in case of the same set of ultimate beneficial owners investing through multiple entities.

"The proposal that clubbing of investment limit for FPIs will be on the basis of common ownership of more than 50 per cent or common control was approved," Sebi said in a statement.

However, the clubbing of investment limits would not be applicable in case of entities having common control if the FPIs are appropriately regulated public retail funds.

Public retail funds typically include insurance companies, pension funds and mutual funds or unit trusts that are open for retail subscriptions.

After considering the recommendations of a working group under the chairmanship of former deputy governor at RBI, H R Khan, and comments received from public, Sebi board decided that the clubbing of investment limit for FPIs should not be done on the basis of same set of beneficial owners.

The regulator said it will carry out necessary amendments to FPI regulations and issue necessary guidelines to implement the changes.

Besides, the regulator said that an earlier proposed exercise for determining a uniform bond valuation methodology to be followed by all regulated entities across the financial sector would not be pursued.

Such an exercise was suggested by a working group on development of corporate bond market in India, chaired by Khan.

However, Sebi will prescribe high-level principles to be followed uniformly across all mutual funds for strengthening the existing system of valuation of corporate bonds for mutual funds.

Regarding the pricing agencies, the regulator has decided to evolve a supervisory and regulatory framework.