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Allow NRIs to manage FPI : panel
Why in the news ?
- A SEBI panel headed by H. R. Khan, Former Deputy Governor of the RBI, has suggested that NRIs, along with Overseas Citizens of India (OCI) and Resident Indians (RIs), be allowed to manage foreign funds that invest in India subject to certain holding limits.
- The panel was constituted amid the apprehensions that SEBI's April 10 circular on beneficial ownership of offshore funds could cause potential capital outflows of $75 billion.
More in the news
- In a relief to foreign investors worried over new know your customer (KYC) and beneficiary ownership norms, SEBI initiated a public consultation process for finalising the new guidelines, after a high-powered panel suggested changes on several contentious proposals and more time for compliance.
- On April 10, SEBI had issued a circular on enhancing KYC norms for Foreign Portfolio Investors (FPI).
- As per these norms, resident Indians, NRIs, Persons of Indian Origin, Overseas Citizens of India cannot be beneficial owner of a fund (or FPI) investing in India.
- The April circular of the regulator had also asked FPIs to disclose name and address of the beneficial owner; whether they are acting alone or together.
Other suggestions by the Panel
- The committee suggested that erstwhile PIOs should not be subjected to any restrictions.
- It also recommended allowing clubbing of investment limits for well-regulated and publicly held FPIs having common control.
- It also favoured doing away with additional KYC documentation requirement for beneficial owners in case of government-related FPIs.
- NRIs will be allowed to invest as FPIs if the single holding is under 25% and group holding under 50% in a fund, according to the panel.
- Changes have also been suggested regarding identification of senior managing officials of FPIs and for beneficial owners of listed entities, as well as disclosure of personal information.
Source
The Hindu, Indian Express.