Sebi may ease FPI norms, plans new governance model for mutual funds

Markets regulator Sebi is mulling easing access norms for investment by foreign portfolio investors (FPIs) and bringing a new framework to strengthen the governance structure for mutual funds, senior officials have said.

Also, the Securities and Exchange Board of India (Sebi) has plans to review the framework for credit rating agencies (CRA) as it seeks to check the menace of 'rating shopping' and 'pick-and-choose' approach in their actions.

Further, the regulator is looking at providing an additional method for listed entities to achieve the minimum public shareholding requirements.

These issues would be taken up at the Sebi board meeting schedule for Thursday, senior officials said.

With regard to FPIs, the markets watchdog may consider simplifying regulatory requirements pertaining to access norms, with a view to easing direct registration for overseas investors.

The regulator will review the norms for CRA on the basis of public comments. It had come out with a consultation paper in this regard in September.

As per the proposal, no CRA should "directly or indirectly hold more than 10 per cent of shareholding and/ or voting rights in another CRA and shall not have representation on the board of the other CRA".

The minimum net worth threshold for the rating agencies has been proposed to be raised to Rs 50 crore from the current level of Rs 5 crore.

In addition, the regulator is considering to revisit its directive on 'loan default disclosure', which will make it mandatory for listed companies to inform stock exchanges about such issues as soon as they occur.

Earlier, Sebi had put off implementation of its directive "until further notice" that required listed firms to inform exchanges if they default on loan payments to banks and financial institutions, just a day before it was supposed to be implemented on October 1.

Sebi may create a full-time post of Chief Vigilance Officer. Further, it plans to make amendments to Investment Advisor norms on the basis of the consultation paper that was issued in June this year. Also, it is looking to amend regulation with respect to qualified institutional placement.