Amid questions over why foreign portfolio investor (FPI) flows into India have lagged some other emerging markets, SEBI Chair Tuhin Kanta Pandey told NDTV Profit that it would be incorrect to attribute outflows solely to regulatory tightening.
“We should avoid linking FPI outflows to regulatory measures. They are dependent on many factors,” Pandey told NDTV Profit.
His remarks come at a time when global funds have been selective in allocating capital across emerging markets, with India witnessing intermittent outflows even as some peers attracted steady inflows.
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‘Enormous Progress' With FPIs
Pandey said the Securities and Exchange Board of India (SEBI) has actively engaged with foreign investors to address operational and structural concerns.
“We have made enormous progress working with FPIs,” he said.
However, he acknowledged that foreign investors continue to face certain structural constraints within the market framework. “FPIs face key structural constraints, such as aspects of the block deal framework,” he noted.
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Consultation Paper In The Works
To address these issues, SEBI is preparing a consultation paper focused specifically on foreign investors.
“A consultation paper for FPIs is looking at structural issues and measures to provide medium- to long-term certainty,” Pandey said.
The paper will examine trading and settlement structures, including mechanisms aimed at improving operational flexibility and cost efficiency for overseas investors.
Among the proposals under consideration is allowing netting for FPIs. “Netting for FPIs — which actually helps save on costs — is also being examined in the consultation paper,” he said.
On settlement cycles, Pandey made it clear there would be no reversal of recent reforms.
“T+1 settlement will continue — there is no rethink,” he said.
He added that there is a need to reconcile regulatory approaches between domestic investors and FPIs to ensure consistency and fairness across market participants.
“We need to reconcile the approach between domestic investors and FPIs,” Pandey said.
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