As per a recent notification, SEBI on August 3 amended its foreign portfolio investors (FPIs) rules for non-resident Indians (NRIs) or overseas citizens of India (OCI).
The move came after the board of SEBI approved a proposal in this regard in June. This act is an amended law of the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019.
The capital markets regulator, in the notification, said that resident Indian fund managers could become constituents of FPI under the Securities and Exchange Board of India Foreign Portfolio Investment (Amendment) Regulations, 2021.
In other words, NRIs, OCIs or resident Indians can be part of FPIs under Regulation 4 (c) of SEBI Foreign Portfolio Investment (Amendment) Regulations, 2021 if they meet the conditions specified by the regulator. In cases of Resident Indians, other than individuals, they are eligible to be the constituents of the applicant if that person is a fund manager of the applicant or s/he is eligible for investment fund approved under Income Tax Act, 1962.
Resident Indians other than Individuals can also be constituents of the applicant if they meet two conditions.
First, a resident Indian, other than individuals, is an eligible fund manager of the applicant as mentioned under sub-section (4) of section 9A of the Income Tax Act, 1961.
Second, the applicant is an eligible investment fund as provided under sub-section (3) of section 9A of the Income Tax Act, 1961 that has been approved under the Income Tax Rules, 1962.
The amendment will bring SEBI’s FPI regulations in line with the recent IT Act amendments.
In a separate circular, Sebi modified operational guidelines for foreign portfolio investments and assigned depository participants following amendments in the FPI rules.