NEW DELHI, Apr 8: Markets regulator Sebi has eased rules for offshore funds seeking to get registered under the “properly regulated” foreign portfolio investor (FPI) category.
At present, funds from jurisdictions that are Financial Action Task Force(FATF) complaint were permitted to get a licence under properly regulated category or Category I.
FATF is an inter-governmental policy making body that sets anti-money laundering standards.
Amending FPI regulations, Sebi said the funds coming from those nations which are non-FATF complaint can also obtain FPI licence in case central government allows.
Now Category I FPI will include entities from the FATF member countries or “from any country specified by the central government by an order or by way of an agreement or treaty with other sovereign governments” which are properly regulated,” Sebi said in a notification issued on Tuesday.
The new norms have become effective from Tuesday, the Securities and Exchange Board of India (Sebi) added.
Earlier in February, Sebi had said foreign investors from Mauritius will continue to be eligible for FPI registration with increased monitoring as per international norms.
The announcement came after the tax haven was put on the ‘grey list’ of FATF.
For several years, there have been apprehensions about Mauritius being a money laundering route for FPIs due to its limited regulatory oversight. But, the Indian Ocean island nation has been taking several steps in recent years to address the concerns.
FPIs have been classified into two categories ,earlier they were divided into three.
The government and government-related investors such as central banks, sovereign wealth funds, international or multilateral organizations or agencies including entities controlled or at least 75 per cent directly or indirectly owned by such government and government related investor; pension and university funds would fall under the Category-I FPIs.
Besides, appropriately regulated entities such as insurance or reinsurance entities, banks, asset management companies, investment managers, investment advisors, portfolio managers, broker dealers and swap dealers come under the Category-I.
Category II FPIs include all the investors not eligible under Category I such as endowments and foundations; charitable organisations; corporate bodies; family offices; individuals; appropriately regulated entities investing on behalf of their client; and unregulated funds in the form of limited partnership and trusts. (PTI)
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