MC EXCLUSIVE A dedicated portal for FPIs in works, SEBI in talks with exchanges and depositories

A dedicated portal for FPIs soon, SEBI in talks with exchanges and depositories, say sources.

Market regulator Securities and Exchange Board of India (SEBI) is considering to launch a dedicated portal for Foreign Portfolio Investors (FPIs). As per the sources, the dedicated portal will be a one-stop destination for familiarisation of all the relevant laws applicable to the FPIs and compliances. This will also help FPIs understand the process of on-boarding and other regulatory timelines. Currently, FPIs have to decide the category under which they want to register and then apply to the designated depository participant (DDP) for registration after filling the common application form (CAF).

As per the first person aware of the development of the portal, “The idea is to have a single platform for FPIs to get all the relevant information at one place, so that they don’t have to look anywhere else”.

“The idea of the regulator is to launch this portal as early as possible. BSE, NSE and depositories like CDSL and NSDL have also been roped in for the development and launch of this FPI portal”, said second person aware of the development.

“Though the on-boarding process will remain through the NSDL FPI page as of now, but in future if the portal gets enough visitors and need is felt then on-boarding can also be lined to the proposed portal” said the third person.

As per sources, SEBI is likely to seek consultation from all the stakeholders before the contours of the portal are finalised. SEBI has already reached out to some stakeholders and sought their views.

As per the sources, the focus of the new regime is Ease of Doing Business and hence various measures are being taken based on feedback of stakeholders. The launch of this portal is one of such measures. An email sent earlier to SEBI for seeking comments on the proposed portal did not elicit any response.

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Measures so far: Outreach cell, Tracker, Easier Tax calculation

Last year in September a dedicated FPI outreach cell was created within SEBI to reach out to FPIs and understand their concerns if any. The cell is tasked with to focus on direct engagement with FPIs and support them in accessing the market seamlessly. Providing guidance in the pre-application stage, including assistance with documentation and compliance. Also, resolving any operational issue during the on-boarding phase. Till last update, FPI outreach cell has reached out to more than 2000 foreign portfolio investors.

A dedicated FPI application tracker has also been activated at NSDL, from where FPIs can track the status of their application and issue if any. If the FPI application is filed and CAF is generated then the registration is granted in maximum 30 days. SEBI regularly takes updates on such pendency of applications and intervenes if required.

But sometimes it takes more than the timeframe suggested due to complexity in the documentation. Regulator is trying to improve the on-boarding , but there are other stakeholders also in the process and sometimes they have their concerns.

In September last year, SEBI reworked the process of tax calculation for FPIs to make it faster, with the support of depositories. Now with the revamped system tax certificates for FPI sale trades executed on ‘T’ day are issued by tax consultants by 9 am India time on ‘T+1’ day. This efficient mechanism is estimated to help FPIs in savings of Rs 2000 crore annually. Previously, FPIs were facing delays in accessing their sale proceeds despite the T+1 settlement cycle. The delay was due to process of issuance of tax clearance on the net sale proceeds.

As part of Ease of doing Business, in March this year SEBI board also cleared the proposal to double the limit for FPIs to share additional granular disclosure.

What is next for FPIs

Also, SEBI has proposed a dedicated category of FPIs who invest in only Indian Government Bonds, a consultation paper has been floated and likely to get the board approval in the board meeting on June 18.

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Also SEBI is in talks with government over use of digital signature for FPIs, this will help in big way in KYC process. As currenty document has to be sent to FPIs for physical signature via courier, which is not only costly but also takes time. As per sources, SEBI and MeITY are discussing, if FPIs can use the Indian digital signature, which is safe and government will be also comfortable with this mode.