The Securities and Exchange Board of India’s (Sebi’s) latest proposal on identifying ultimate beneficial ownership of offshore funds could impact portfolio flows and force foreign portfolio investors (FPIs) to redraw their India strategy, experts say.
The markets regulator on Wednesday proposed to categorise FPIs with a composite exposure of more than Rs 25,000 crore and a single-group exposure of more than 50 per cent of their assets as ‘high risk’. Such FPIs will be required to provide additional granular disclosures such as full identification of their ownership, economic interests, and control rights down to the level of natural persons or public retail funds or large listed companies.
After the enforcement of new disclosure norms, experts say, some FPIs may review their arrangement for investing in the Indian market, fearing being tagged ‘high risk’.
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