The Securities and Exchange Board of India has relaxed periodic KYC requirements for foreign portfolio investors, extending the review cycle to as long as eight years for specified categories and removing a separate declaration requirement at the time of registration continuance.
The changes, announced in a circular dated October 30, will take effect from December 1 and are aimed at reducing compliance costs and promoting ease of doing business for foreign investors.
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Under the revised framework, Category I FPIs registered under Regulation 5(a)(i) will undergo KYC reviews once every eight years, irrespective of whether they operate in high-risk or non-high-risk jurisdictions. Other Category I investors will move to a two-year review cycle.
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For Category II FPIs, regulated entities in non-high-risk jurisdictions will also get an eight-year review cycle, while those in high-risk jurisdictions will undergo reviews every two years. Other Category II investors will face biennial reviews, irrespective of jurisdiction.
The changes mark a relaxation from the existing framework, which required reviews annually or once every three years, depending on the investor's category, jurisdiction and regulatory status. Under the earlier rules, several Category II investors and FPIs from high-risk jurisdictions were subject to annual reviews.
SEBI has also removed the requirement for FPIs to intimate changes in previously submitted information or provide a no-change declaration when continuing their registration. Investors will, however, continue to pay registration fees to their designated depository participants at least 15 days before the existing registration expires.
The regulator has retained the existing KYC review periodicity for Government Securities FPIs, which remains linked to RBI-prescribed bank account review requirements. SWAGAT-FI investors will continue with a 10-year review cycle.
Depositories, custodians and designated depository participants have been directed to update their systems and inform affected investors. The changes amend SEBI's May 2024 Master Circular governing FPIs, DDPs and eligible foreign investors.
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