SEBI Imposes Rs.50 Lakh On Nexpact, AIRD Investment, Aviator Global For Defying Rules

SEBI Imposes Rs.50 Lakh On Nexpact, AIRD Investment, Aviator Global For Defying Rules

Observes that the assets were not in line with the applicable norms for the Foreign Portfolio Investors

The Securities and Exchange Board of India (SEBI) has imposed Rs.50 lakh on three entities for exceeding the prescribed limits on short-term investments in debt securities.

In three separate orders, Rs.20 lakh each was imposed on Nexpact Ltd and AIRD Investment Commercial LLC, while Aviator Global Investment Fund was ordered to pay Rs.10 lakh.

Earlier, the capital markets regulator inspected the custodian, Orbis Financial Corporation, for the Financial Year 2022.

The regulator observed that investments made by the three entities were not in line with the permissible limits (related to residual maturity) for investment in debt securities applicable for the Foreign Portfolio Investors (FPIs) as of 31 March 2022.

It probed from April 2018 to November 2023 to assess the compliance of the companies on FPI provisions and the rules of the Reserve Bank of India (RBI).

As per the RBI, the short term investments should not exceed 30 percent of the total investment by an FPI in any category.

The markets watchdog stated, “The noticee (AIRD Investment), breached the 30 percent short-term investment limit across multiple periods. The violations persisted from 19 December 2021 till November 2023. This meant the firm held investments for 562 days, which is almost two years.”

Similarly, Nexpact exceeded the investment cap for a continuous period of 586 days (December 2021 to July 2023). The FPI admitted the breach was due to oversight and immediately rectified.

However, SEBI held that the violation was repetitive, and the form did not adhere to the permissible limit.

For Aviator Global, the regulator noted that it failed to maintain the short-term investments above the prescribed threshold for 373 days between September 2021 and October 2022.