Sebi's FPI Disclosure Rules: Large FPIs fully compliant, investors with concentrated holdings on shopping spree, say sources

Large foreign portfolio investors (FPIs) with over Rs 25,000 crore in Indian equity assets have either met or been exempted under Section 43B of FPI Regulations from additional disclosure requirements ahead of the September 9 deadline, according to people familiar with the development.

Section 43(B) allows Sebi to grant relaxation of any of the provisions under the regulations if Sebi is satisfied that (a) non-compliance is due to factors beyond the control of the entity or (b) the requirement is procedural or technical in nature. Many FPIs have filed applications for exemption under this provision, the people cited above said, requesting anonymity.

Therefore, investors' fear of FPIs selling heavily to avoid non-compliance after the deadline of September 9, thus causing the market to fall, are exaggerated, added the sources. On the contrary, FPIs who qualify for the disclosure framework because of the second criteria--of having concentrated holding in a single corporate group--are increasing their exposure to the Indian markets by buying additional securities to be in compliance with the August 24, 2023, circular.

The circular mandated disclosure of additional granular details for FPIs with concentrated holdings, with more than 50 percent of their Indian equity AUM, in a single corporate group and for those with high exposure to Indian equity market. The FPIs were asked to provide details of all entities holding any ownership, economic interest or exercising control in the FPI, on a full look-through basis, up to the level of all natural persons.