Market regulator, SEBI has written an email to banks who deal with FPI (Foreign Portfolio Investor) registration, as per industry sources. The mail was sent out on Friday with a focus on two issues - FPI registration and beneficial ownership.
SEBI in the letter has asked the 'designated depository participants' or DDPs to reach out to their FPIs by 31st March 2023. The DDPs by the way are units within banks are the ones who deal with FPI registration.
In this letter, SEBI has asked these DDPs to ask their FPIs to give them the updated beneficial owner details by 30th Sept 2023. The communication says that if this is not done by the stipulated deadline the FPIs will become ineligible to continue their registration. This in other words means that they will have to sell their holdings by 31st march 2024.
CNBC-TV18 has reached out to SEBI for a comment and a response is awaited.
What is SEBI exactly saying
SEBI is focussing on two things. One registration of FPIs. For example, if there is a German bank which has a unit based out of Singapore or elsewhere and invests as an FPI in India, according to SEBI the legal entity responsible is the German bank and not the unit operating out of Singapore.
The second issue the SEBI communication touches upon is the identification of beneficial ownership. So, if there is an FPI investing in India and there is no entity which can be identified as a - 1) owner - 10 percent is the threshold or 2) control - then the beneficiary owner has to be a senior person and not some junior person or someone managing money etc.
Market watchers see this as a clear communication – SEBI wants to know the end beneficial owner of FPIs and there are clear timelines given by which it wants this information.
(Edited by : Abhishek Jha)
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