July 05, 2019

Budget 2019: Know Your Customer Norms To Be Eased For Foreign Portfolio Investors, Says FM Nirmala Sitharaman

[ By Bobby Anthony ]


Union Finance Minister Nirmala Sitharaman has stated that Know Your Customer (KYC) norms would be eased for Foreign Portfolio Investors (FPIs), while presenting her maiden budget.

She stated that KYC norms for Foreign Institutional Investors (FIIs) and Foreign Portfolio Investors (FPIs) would be rationalized and simplified to promote a more investor friendly climate, without compromising on the integrity of cross-border capital flows.

Investments by Foreign Institutional Investors (FIIs) and Foreign Portfolio Investors (FPIs) in debt securities would be allowed to be transferred as well as sold to domestic investors in a timely manner, she stated.

She also proposed to allow FPI investment in debt securities issued by non-banking financial companies (NBFCs).

Among other proposals, she said the Non-Resident Indian (NRI) portfolio route would be merged with the Foreign Portfolio Investors (FPI) route for seamless investment in stock markets.

She said a number of steps would be taken in consultation with the RBI and SEBI to deepen the corporate bond market.

“Inter-operability of RBI depositories and SEBI depositories is necessary for seamless transfer of treasury bills and the government will take necessary measures in this regard in consultation with the RBI and the SEBI,”she said.

It may be recalled that earlier, a SEBI-constituted panel called the Working Group On SEBI (Foreign Portfolio Investors) Regulations, 2014, had submitted its report to the capital market regulator.

The group, headed by former RBI Deputy Governor H R Khan had pitched for a liberalized investment cap, review of prohibited sectors for foreign investment for foreign portfolio investors (FPIs), permitting FPIs to carry out off-market transactions and a review of restrictions on sovereign wealth funds investment in corporate debt securities.

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