Foreign investors to tap Sebi over curbs on NRI investment

MUMBAI : Foreign portfolio investors (FPIs) are working on a representation urging market regulator to scrap the upcoming limits for non-resident Indians (NRIs) investing in their schemes, said two people aware of the matter.

In November 2019, the Securities and Exchange Board of India (Sebi) ordered that by December 2020, no single NRI can be the beneficial owner of more than 25% of any foreign fund’s asset under management (AUM), and cumulatively, NRIs cannot hold more than 50% of the AUM. While Sebi did not attribute a reason for its decision, it is believed that the regulator wanted to keep a check on money laundering and round-tripping.

As per the draft representation prepared by the FPIs, due to the covid-19 pandemic, the ensuing lockdown and economic contraction, many India-dedicated funds may have seen a disproportionate rise in the weightage of money from NRIs, overseas citizens of India (OCI) and persons of Indian origin (PIO) vis-a-vis pure FPI money. The increase in such investments could have led to the threshold of 50% being breached or likely to be breached going ahead, the people cited above said, seeking anonymity.

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