Sebi will review compliance burden on foreign investors: Tuhin Kanta Pandey

The Securities and Exchange Board of India (Sebi) will review rules that make India less competitive for foreign investors and issue a consultation paper on aligning them with global standards, Chairman Tuhin Kanta Pandey said at the Business Standard BFSI Insight Summit 2026 in Mumbai on Wednesday.

Speaking to Business Standard’s AK Bhattacharya in a fireside chat, he said, “We should not be complacent on how we benchmark our markets to global benchmarks."

He said Sebi had held extensive discussions with foreign portfolio investors (FPIs) and other global market participants to understand their concerns and had already addressed several issues relating to market access, settlement and onboarding. However, some rules continue to distinguish India from both developed and emerging markets, prompting the regulator to examine requirements that impose an unnecessary compliance burden, he said.

“Our markets are well appreciated,” Pandey said, adding that the regulator would continue to assess whether existing processes were necessary and whether market participants could operate with greater ease.

Sebi has modified the block window framework, introduced a closing option window for cash equities, and allowed net settlement of funds for eligible FPI transactions in the cash market. The net settlement facility will become operational in December, Pandey said.

The regulator has also simplified onboarding through a common application form covering FPI registration, bank accounts and income-tax requirements. Digital powers of attorney have been permitted to avoid the need for apostille certification, while Sebi is working with the Reserve Bank of India (RBI) on digital certification of documents.

Under the SWAGAT-FI framework, some foreign portfolio investors have recently been registered in as little as five days, compared with the months the process could previously take.

Pandey said investment decisions depended on several factors, including earnings growth, post-tax dollar returns, competing investment opportunities, currency movements, oil prices and transaction and capital gains taxes.  

In his keynote address, Pandey said India's changing financing needs required a deeper securities market that could connect businesses and infrastructure projects with different sources of capital.

India's market capitalisation-to-GDP ratio has increased from 69 per cent in FY16 to about 130 per cent, while outstanding corporate bonds have reached nearly ₹61 trillion, equivalent to about 55 per cent of bank credit to industry and services, he said.

Mutual funds have grown at around 20 per cent annually over the past decade and now account for about 23 per cent of India's GDP. Average monthly systematic investment plan (SIP) contributions in FY27 until September stood at around ₹32,000 crore, more than four times the FY19 level.

Pandey said banks, bond and equity markets, and investment funds needed to complement one another. Corporate bonds could provide long-term debt, while real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) could connect investors with income-generating assets.

Sebi has streamlined initial public offering (IPO) and rights issue processes, shortened listing timelines for debt securities, and exempted certain small-value private placements with a face value of ₹10,000 from mandatory merchant banker deployment, subject to conditions, he said.

Pandey said that Sebi has also relaxed mandatory listing requirements for certain outstanding unlisted non-convertible debt securities when an issuer proposes to list for the first time. In the alternative investment fund (AIF) space, the GARUDA mechanism aims to reduce the time needed to launch funds.

Other measures include a single filing system for listed companies, a simplified accreditation framework, specialised investment funds (SIFs), and the Portfolio Managers' Route for Investing in Mutual Fund Units (PRIM).

Eligible FPIs have also been permitted to participate in non-cash-settled, non-agricultural commodity derivatives and non-agricultural index derivative contracts, he said.  

Pandey said Sebi is reviewing the small and medium enterprise (SME) listing framework, including proposals to determine eligibility based on post-issue market capitalisation and require large issuers to follow Indian Accounting Standards (Ind AS).

He said the existing framework needed to balance lower compliance requirements for smaller companies with stronger governance as businesses grew. The regulator also wants to reduce issuance costs and improve liquidity, including by reassessing the market-making framework.

India has more than 600,000 companies, he said, and could aim to bring at least 2,000 companies with strong corporate standards to public markets.

On the monitoring of IPO proceeds, Pandey said Sebi wanted third-party monitors to report directly to stock exchanges if issuers failed to cooperate, improving transparency on whether funds were used for their stated purposes.