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New SEBI Circular on Streamlining on-boarding Process of FPIs

process of FPIs

To keep up with the changing environment and needs of the securities market, the Securities Exchange Board of India (SEBI) frames rules from time to time in the form of Rules, Regulations, Circulars, Notifications, etc. Under section 11 (1) of the Securities Exchange Board of India Act, 1992, SEBI is empowered to frame rules. In a recent exercise of the power under section 11, SEBI has recently issued Circular No. SEBI/HO/AFD/P/CIR/2023/043 dated 27th March, 2023 streamlining the on boarding process of Foreign Portfolio Investors (FPIs). The circular came into effect on the date it was notified. This circular modifies the “Master Circular for Foreign Portfolio Investors, Designated Depository Participants and Eligible Foreign Investors” issued on 19th December 2022 vide SEBI Circular No. SEBI/HO/AFD-2/CIR/P/2022/175. The circular not just introduces changes but also aligns the provisions to the Master Circular on SEBI (Foreign Portfolio Investor) (Amendment) Regulations, 2023 issued on 20th March 2023. The circular at hand aims to ease the on boarding process of FPIs and on reducing the time taken for granting registration and opening demat, trading and bank accounts of FPIs. Under this circular, SEBI allows uploading scanned copies of the documents for grant of FPI registration, use of digital signatures and certified copies of original documents, etc. Let’s understand the intricacies of this circular regarding streamlining the on boarding process of FPIs in detail.

  1. Uploading scanned copies of applications, forms and supporting documents
  2. As per this circular, the scanned copies of the Common Application Form (CAF) and scanned copies of certified supporting documents uploaded on the SEBI website[1] are sufficient for the grant of FPI registration by the Designated Depository Participant (DDP) if the supporting document is accompanied with applicable fees.
  3. The DPP shall update the CAF module as per the standard process for the issuance of the Permanent Account Number (PAN).
  4. Once the PAN is allotted to the applicant, the scanned copies of certified KYC documents of the applicant shall be uploaded to KYC registration agencies (KRA) by the DDP or custodian. This will enable other intermediaries and entities to access such documents from KRA and complete their KYC requirements for opening the demat, trading and bank accounts.
  5. The custodian must ensure the availability of appropriate systems and procedures to prevent any activity in such accounts till the verification of physical documents is done.
  6. It is only after the physical documents are received and verified by the DDP or Custodian that the Custodian makes an to the Clearing Corporation for allotment of a CP Code to the FPI and carries out necessary steps for enabling FPI to transact in the Indian securities market.
  • Use of Digital Signature by FPIs

This circular allows the FPIs to use digital signatures for the execution of CAF and other documents relating to registration. Subject to a condition that the digital signatures should be as per the provisions of the Information Technology Act, 2000.

  • SWIFT Mechanism for the use of copies of original documents by authorized bank officials
  • Presently, copies of all documents should be submitted along with originals by the FPI applicants for verification. Where the original is not produced for verification, then the copies should be physically attested by entities authorized for attesting the documents.
  • In place of physical attestation, certified copies of original documents by authorized bank officials via the SWIFT mechanism are accepted by DDPs or custodians for the purpose of verification of documents.
  • The authorized bank official is required to send copies of original documents to DDP or Custodian by certifying the authenticity of the documents through authentic free format SWIFT messages types sent to DDP or custodian.
  • PAN Verification through the CAF Module available on the website of the Depositories

Where a PAN application by an FPI applicant is made through the CAF portal, the DDP or Custodian verifies the PAN on the basis of its availability on the CAF module on the website of the depositories. On the website, PAN is reflected through an automated secure feed from the Income Tax Department.

  • Unique Investor group ID submission by FPI applicant instead of complete details of group constituents
  • At the time of registration, the FPI applicant has to provide details of FPIs with whom it shares ownership of greater than 50% or common control under the “Clubbing of Investment Limit” section of CAF. It is then that the depositories generate a unique FPI investor ID for the identification of each FPI investor group.
  • For the purpose of operational convenience, FPI applicants belonging to an existing FPI investor group may submit their unique FPI investor group ID in the CAF instead of providing complete details of group constituents. Where the applicant wants to club additional FPIs in the unique investor group ID, then the FPI has to provide the details of additional FPIs along with the investor group ID.
  • Change in timelines

In addition to the above changes, SEBI has also changed the timelines given under the master circular. The term “as soon as possible but not later than seven working days” has been inserted in place of “forthwith” in the following case:

  1. Where an application has been filed for a change in name in the PAN records;
  2. Where intimation has been made to DDP for deletion of sub-fund or share classes or equivalent structure that invests in India;
  3. Where a written update to SEBI and DDP has to be made for any change in material information previously furnished by the FPI;
  4. Where any change in information or particular relating to FPI registration has been sought;

In the following cases, the term “as soon as possible but not later than two working days” has been inserted in place of “forthwith”:

  1. Where an intimation of material change has been made by DDP to SEBI regarding the failure of FPI to intimate material change to the DDP for more than six months;
  2. Where the notification by the custodian to SEBI has been made in cases where the FPI or its underlying investor come under the Sanction List as notified by the United National Security Council;
  3. Where intimation has been made by the depository to SEBI in case of any breach of investor limits by the FPI.


In conclusion, it can be said that SEBI has made an attempt to simplify the procedural requirements of the on boarding process of FPIs. These changes in the on boarding process of FPIs are a welcome step. It mandates the FPI to inform DDP and SEBI of any material change in the information. It has simplified the onboarding process of FPIs. This circular reduces the time taken for the grant of registration to FPIs due to the lengthy onboarding process of FPIs. The amendments are expected to make the onboarding process of FPIs more efficient.

Read our Article: Operational Aspect of Amendment to SEBI AIF Regulations

Ankita Tiwari

Ankita is an Advocate and has joined Enterslice as a Legal Researcher. Her work focuses on General Civil and Commercial laws, Corporate Taxation Laws, Labour and Employment Laws and Dispute Resolution. She is a law graduate from School of Law, University of Petroleum and Energy Studies. Prior to joining Enterslice, Ankita has the experience of practicing law in Delhi and Odisha.

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