SEBI Eases Regulations for Foreign Portfolio Investors

SEBI announced a new framework for Foreign Portfolio Investors (FPIs) to streamline handling of securities post-registration expiry. The guidelines extend the reactivation period and provide a phased disposal timeline. Most significantly, it addresses issues surrounding frozen accounts and offers a structured exit mechanism for expired registrations.

SEBI unveiled a regulatory framework on Wednesday designed to simplify the process for Foreign Portfolio Investors (FPIs) dealing with securities held in their demat accounts post-registration expiry.

Previously, FPIs needed ongoing registration to hold securities in India, requiring fee payments every three years. Failure to pay led to registration expiry without provisions for liquidation, freezing the securities.

As of June 30, 2023, 55 FPIs with expired registrations held approximately Rs 3,300 crore in frozen securities. The new guidelines allow reactivation within 30 days post-expiry, enabling the sale of securities. If not reactivated, FPIs have 180 days for disposal. An additional 180-day extension is possible but subject to a 5% financial disincentive for unsold securities, transferred to SEBI’s Investor Protection and Education Fund (IPEF).