SEBI's latest board meeting: Here are the key takeaways

SEBI

• SEBI eases compliance for AIFs, REITs, and InvITs
• Minimum investment for social impact funds cut to Rs 1,000
• FPIs allowed net settlement for cash market trades

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The Securities and Exchange Board of India (SEBI) held its board meeting on Monday, March 23, approving a wide-ranging set of regulatory changes covering market intermediaries, foreign investors, alternative funds, and governance norms. As it sought to balance ease of doing business with stronger oversight, measures announced include easing compliance for AIFs and REITs/InvITs, revising ‘fit and proper’ criteria, and introducing operational relief for FPIs, among other comments.

Here are the key highlights of SEBI Board Press Conference:

Code of conflict proposal for Board members and SEBI officials cleared

The SEBI Board approved an enhanced conflict-of-interest framework for its members and officials, based on recommendations of a high-level committee. The overhaul introduces stricter norms around disclosures, trading restrictions, and recusals, along with a digital system to track conflicts and the creation of an Office of Ethics and Compliance. The framework also brings the Chairman and Whole-Time Members under tighter investment and transparency rules, aligning them more closely with existing employee norms.

FPIs will be allowed for net settlement, will reduce fund issues on rebalancing days

SEBI has allowed foreign portfolio investors (FPIs) to settle funds on a net basis for outright cash market transactions. Currently, FPIs follow gross settlement, which increases funding requirements and costs. The new mechanism will reduce fund blockage and is expected to be particularly beneficial during index rebalancing periods, when large buy and sell trades coincide.

READ MORE: SEBI allows fund netting for FPI cash market trades to cut funding costs

Key proposals for Ease of Doing Business for REITs and InvITs approved

The regulator has approved a set of measures to ease operational constraints for REITs and InvITs. These include allowing InvITs to continue holding investments in SPVs even after project completion under certain conditions, expanding investment avenues through lower-risk liquid mutual funds, permitting limited exposure to greenfield projects for privately listed InvITs, and providing greater flexibility in borrowings for highly leveraged structures.

Big relief to intermediaries, Fit &Proper criteria reviewed, no disqualification on mere filing of FIR, Chargesheet

SEBI has revised the ‘fit and proper person’ criteria for intermediaries, clarifying that the mere filing of an FIR or chargesheet will not automatically lead to disqualification. Instead, such cases will be evaluated on a principles-based approach. At the same time, the regulator has tightened norms by expanding disqualification to include convictions for economic offences and ensuring due process through a mandatory opportunity of being heard.

READ MORE: No disqualification on mere FIR

Minimum investment value for Social impact funds reduced to Rs 1,000 from existing Rs 2 lakh

To boost participation in social finance, SEBI has reduced the minimum investment threshold for individual investors in social impact funds from ₹2 lakh to ₹1,000. The move aligns with broader efforts to deepen retail engagement with the Social Stock Exchange and make impact investing more accessible to a wider investor base.

Flexibility for AIFs in winding up of scheme and surrendering of registration cleared

The Board has introduced flexibility for alternative investment funds (AIFs) in winding up schemes and surrendering registration. AIFs will now be allowed to retain liquidation proceeds beyond their tenure under specific conditions such as pending litigation, tax liabilities, or operational expenses. Additionally, a new ‘inoperative fund’ category with lighter compliance requirements has been introduced to reduce the regulatory burden on funds that are no longer actively managing investments.

READ MORE: SEBI eases exit norms for AIFs, introduces ‘inoperative fund’ framework 

Separately, commenting on the recent resignation of an independent director at HDFC Bank, SEBI flagged the need for greater accountability and adherence to conduct standards in such exits. While not part of formal board decisions, the remarks signal the regulator’s focus on governance practices and transparency at the board level.