The Securities And Exchange Board of India eased currency derivative rules and set a $5 million limit for taking currency positions, according to a circular from the Reserve Bank of India. Domestic investors and foreign portfolio investors (FPIs) will be able to take unhedged Indian ruppe currency positions of up to $5 million. The $5 million limit applies to outstanding notional exposure at any point.
The limit will be calculated across all Indian rupee currency pairs combined. The positions will be aggregated across all recognised stock exchanges. The FPIs will not have short positions exceeding $5 million across exchanges in the foreign currency-indian rupee contracts.
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The FPIs will require underlying exposure In Indian debt or equity securities to take long positions beyond $5 million.
The equity and debt mutual fund units also qualify as underlying exposure for FPIs. The domestic clients can take positions beyond $5 million as subject to RBI's prescribed conditions.
SEBI also relaxed the Know Your Customer (KYC) essentials with respect to individuals residing beyond India's borders, including non-resident Indians (NRIs), overseas citizens of India (OCIs) and foreign nationals. facilitating them to conclude their onboarding process via digital means.
They can complete the onboarding process digitally from Financial Action Task Force (FATF)-compliant countries without being physically present in India.
The revised framework, which comes into effect on Dec. 3, permits SEBI-registered intermediaries to accept KYC information and supporting documents electronically, making it easier for overseas investors to open and maintain investment accounts.
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The move is aimed at simplifying onboarding and reducing compliance burdens for investors residing outside India. The framework will also apply to re-KYC requirements for clients based in FATF-compliant jurisdictions.
SEBI has also enhanced the portability of KYC records by directing KYC Registration Agencies (KRAs) to mark individual data fields as "validated" when verified against official databases. KYC records can be shared across intermediaries even if all attributes have not been validated, improving the ease of doing business for investors.
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