FPI rulebook revamp: Sebi proposes simplified registrations; clearer KYC rules, unified framework on cards

Sebi on Friday proposed a comprehensive overhaul of the Foreign Portfolio Investor (FPI) framework, aiming to streamline registrations and introduce an abridged application option for related funds, even as the regulator seeks to ease compliance for global investors.In a consultation paper, the Securities and Exchange Board of India said the move is intended to enhance ease of doing business by simplifying procedures and creating a more unified rulebook, according to PTI.As part of the revamp, Sebi has suggested a complete update and simplification of the Master Circular for FPIs and designated depository participants (DDPs), consolidating all rules and circulars issued since May 2024 into a single, clearer document.According to the proposals, a simplified registration process is planned for select FPI categories — including funds managed by an investment manager already registered as an FPI, sub-funds of an existing master fund, segregated share classes, and insurance schemes linked to an already registered entity.Such applicants may choose to fill the entire Common Application Form (CAF) or use an abridged version requiring only information unique to the new entity, with the remaining details automatically populated. Custodians would obtain explicit consent to rely on pre-existing information and ensure unchanged details remain accurate.Once the application is submitted, custodians will update the CAF module, while DDPs will issue Sebi-generated registration certificates after verifying eligibility. Sebi has also outlined steps DDPs must follow, including due diligence, clarifications on incomplete forms, PAN verification, and country-of-residence and regulatory status checks.Beyond registration reforms, the updated circular proposes clearer rules on KYC and beneficial-owner identification. It specifies requirements for NRIs, OCIs and resident Indians, while introducing dedicated frameworks for FPIs investing exclusively in government securities, IFSC-based FPIs, banks, insurance entities, pension funds and funds with multiple investment managers.Sebi has also detailed procedures for renewal, surrender, transition and reclassification of registrations, along with uniform compliance and reporting standards for custodians and DDPs.The regulator has sought public comments on the proposals until December 26.