SEBI eases FPI norms for IFSC funds, aligns sponsor contribution limits

SEBI

The Securities and Exchange Board of India (SEBI) has introduced significant amendments to the SEBI (Foreign Portfolio Investors) Regulations, 2019, aimed at enhancing the ease of doing business for Foreign Portfolio Investors (FPIs) operating from International Financial Services Centres (IFSCs).

SEBI’s board has approved a proposal to allow retail schemes in IFSCs with resident Indian sponsors or managers to register as FPIs. Previously, only Alternative Investment Funds (AIFs) in IFSCs with resident Indian sponsors or managers were permitted to register as FPIs.

The limits on sponsor contribution by resident Indian non-individuals in funds set up in IFSC, as specified by SEBI and IFSCA, were at variance, leading to the risk of non-compliance by such entities. Addressing this mismatch, the Board has approved a proposal to amend SEBI FPI Regulations 2019, so that such sponsor contributions shall now be subject to a maximum of 10% of corpus of the Fund (or AUM, in case of retail schemes).

The previous circular, dated November 4, 2024 on 'Operationalization of Investment by Indian Mutual Funds in Overseas MFs/UTs - SEBI', permitted Indian mutual fund schemes to invest in overseas Mutual Funds or Unit Trusts (MFs/UTs) that have exposure to Indian securities, subject to specified conditions. Further to this, the Board has also approved amendments to allow overseas MFs/UTs registering as FPIs to include Indian mutual funds as constituents, subject to the conditions of the aforementioned circular.