FPIs Need Not Declare Income Details and Mobile No. to Sebi

FPIs Need Not Declare Income Details and Mobile No. to Sebi

Foreign Portfolio investors (FPIs) will not have to declares their mobile numbers and income range with the Indian capital market regulator.

The Securities and Exchange Board of India (Sebi) has relaxed and earlier directive requiring offshore and institutional investors to share certain know your customer attributes’.

According to an instruction form the National Securities on July 30, institutional investors, including foreign funds can share either the mobile numbers or the office landline number. Also, it will no longer be mandatory for them to submit income details to the regulator.

Large MNC banks, which act as custodians of FPIs, had told Sebi that foreign investors were unwilling to share personal details (like mobile number) on the grounds of data confidentiality. “We believe that reluctance has only increased following the snooping controversy. Custodians had told Sebi that they already have the mobile numbers and email ID of compliance officers of foreign fund,” said an official with a market intermediary.

  FPIs constitute the largest group of investors in the stock market, which has touched a new high this week.

The revised directive will also be applicable to domestic institutional investors, like mutual funds, banks, pension funds and insurance companies, as well.

“Sebi probably sensed that given the privacy concerns this would not work. It had postponed the deadline twice. Also, it was not a practical move as compliance officers or key persons in a fund or institution may leave or their numbers may change,” said another person. Sebi had earlier warned that failure to update could result in blocking of accounts of existing FPIs.

However, all non-institutional investors will have to regularly update all details like mobile numbers, address, income range, and email ID. The new deadline for existing clients as per the latest directive, is September 30, 2021. For new accounts, the six KYC attributes will be mandatory from August 1.

Over the past few years, Sebi has been collecting information from custodians on ultimate beneficial owners of FPIs and kept a close track of the total contribution of non-resident Indians (NRIs) in a fund pool.

While round-tripping of funds, money laundering transactions, and possible violations of foreign holding restrictions in listed companies are legitimate concerns, the regulator may run into jurisdictional hurdles and complex layering that make identifying the last natural person in a foreign fund vehicle virtually impossible.

The custodians, while making their representations on the disclosure rules for FPIs, had said that the KYC from FPIs were finalized after consultation with the ministry of finance and the regulator, and incorporating additional details that are not required as part of risk-based KYC regulations, would call for changing the application form for FPIs.

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *