SEBI said on Wednesday it would review its decision to impose a ban on non-resident Indians (NRIs) and persons of Indian origin (PIOs) from holding beneficial ownership (BO) in foreign portfolio investment (FPI) vehicles. The market regulator had imposed the ban in April, causing FPIs much heartburn.

Following concerns raised by FPIs, SEBI had set up a working group under the chairmanship of HR Khan, former Deputy Governor of the Reserve Bank of India. “The working committee has heard various stakeholders, held consultations and is in the process of giving its recommendations. The Ministry of Finance has also been consulted on various issues. Based on these inputs, SEBI will review the matter and shortly take a holistic view,” the regulator said in a statement.

This comes a day after SEBI had said it was “preposterous and highly irresponsible” to claim that $75 billion of FPIs would exit the country because of the circular issued in April.

On Monday, Mumbai-based legal firm Nishith Desai Associates and foreign investor lobby group Asset Managers Roundtable of India had claimed $75 billion would flow out of India if SEBI implemented its ban on NRIs and PIOs from holding beneficial ownership in FPI vehicles. Stock markets, too, took note and fell on Monday and Tuesday.

In April, SEBI had asked FPIs under Category II and III to report, within six months, the beneficial ownership or ultimate persons controlling the entities. Category II FPIs largely include regulated institutions, persons and broad-based funds as well as university and endowment funds.

Most of these were exempt from rigorous KYC requirements, such as submitting name and personal identity proof. But SEBI said it can call for such details and has barred NRIs and PIOs from beneficial ownership in FPIs.

Also read Edit p8

Related Topics
comment COMMENT NOW