SEBI Raises FPI Disclosure Threshold to Rs 50,000 Crore Amid Rising Trading Volumes
The Securities and Exchange Board of India (SEBI) has cleared the rise in the threshold of disclosure by foreign portfolio investors (FPIs) to Rs 50,000 crore from Rs 25,000 crore. The move was made during Monday's SEBI board meeting as a response to the high growth in cash equity market volumes of trading.
As the earlier threshold was fixed in FY 2022-23, volumes of trade have doubled more than twice. Only FPIs holding over Rs 50,000 crore in Indian equities will be asked to make additional disclosures under the new norms. These are intended to cover compliance under the Prevention of Money Laundering Act (PMLA) and preserve transparency in the financial system.
"Cash equity market trading volumes have more than doubled between FY 2022-23 and the present FY 2024-25. Taking this into consideration, the Board has approved a proposal to raise the applicable threshold from the current Rs 25,000 crore to Rs 50,000 crore", SEBI said.
Even with the threshold change, SEBI has maintained the additional disclosure requirement for FPIs if over 50% of their equity assets under management (AUM) are invested in one corporate group. Allaying fears over the new norms, SEBI Chairperson Tuhin Kanta Pandey explained that a number of funds, such as public and sovereign funds, were already exempt from these additional disclosures.
"Most of the funds (public, sovereign funds) were exempted from these extra disclosures. There are already PMLA and KYC disclosures for all FPIs. We were merely seeking more detailed disclosures", Pandey said.
Besides increasing the disclosure limit of the FPI, SEBI has also made regulatory amendments to the norms of investing in Category II Alternative Investment Funds (AIFs). The regulator has diluted the current norm by permitting the funds to make investments in listed debt securities of rating 'A' and below. This decision will provide added flexibility to the AIFs with proper risk management.
The latest regulatory adjustments reflect SEBI’s ongoing efforts to balance market transparency with the evolving investment landscape.
