Mumbai: The Securities and Exchange Board of India (SEBI) on Monday announced that it has approved an increase in the disclosure threshold for foreign portfolio investors (FPIs) from Rs 25,000 crore to Rs 50,000 crore. This change was announced after the SEBI board meeting held here in the day.
The regulator stated that this adjustment was necessary due to the sharp rise in trading volumes in the cash equity market. Since the previous threshold was set in FY 2022-23, market trading volumes have more than doubled.
Now, only FPIs holding over Rs 50,000 crore in Indian equities will be required to make additional disclosures, as per the SEBI’s circular issued on August 24, 2023. These disclosures are intended to ensure compliance with the Prevention of Money Laundering Act (PMLA) and related regulations.
The primary objective is to prevent the potential misuse of investments and maintain transparency in the financial system. “Cash equity market trading volumes have more than doubled between FY 2022-23 (when the limits were set) and the current FY 2024-25. In light of this, the Board approved a proposal to increase the applicable threshold from the present Rs 25,000 crore to Rs 50,000 crore,” the market regulator said in a statement.
While the threshold has now been raised, the SEBI has made no changes to another key requirement. FPIs will still need to make additional disclosures if more than 50 per cent of their equity assets under management (AUM) are concentrated in a single corporate group.
Addressing questions about the revised norms, Chairperson Tuhin Kanta Pandey clarified that several funds, including public and sovereign funds, were already exempt from these additional disclosures.
“Many of the funds (public, sovereign funds) were exempt from these additional disclosures. There are already disclosures as per PMLA and KYC for every FPI. We were only asking for more granular disclosures,” Pandey stated.
The market regulator also announced changes in investment norms for Category II Alternative Investment Funds (AIFs). The SEBI has eased the existing rule by allowing to invest in listed debt securities that are rated ‘A’ or below.