Process of Foreign Portfolio Investor Registration

Foreign Portfolio Investments (FPIs) are short-term investments into a group of securities in a foreign country. To invest in FPI in India, foreign portfolio investors have to procure a certificate of registration under the SEBI (FPI) Regulations, 2019. Enterslice provides services related to Foreign Portfolio Investor..

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An Overview of Foreign Portfolio Investor Registration

Foreign Portfolio Investor is one who is interested in holding securities and financial assets outside their home country. The term 'portfolio' in Foreign Portfolio Investor denotes a group of securities representing a specific pool of funds to carry out investments. The investment made by Foreign Portfolio Investors is known as Foreign Portfolio Investment (FPI). FPI includes stocks, bonds, mutual funds, fixed deposits, or exchange-traded funds (ETFs). FPI is one of the common ways to invest in a foreign country after Foreign Direct Investment (FDI). Unlike FDI, FPI is passively held by the investors and the investors have no control over the ownership of the property or stake of a company. 

In order to issue shares and securities as a Foreign Portfolio Investor, a company has to register with the stock exchange as per the requirements of the Securities Exchange Board of India (SEBI). Any foreign investor who wants to invest in securities in India as a Foreign Portfolio Investor will have to apply for obtaining a certificate of registration from SEBI. The SEBI (FPI) Regulations of 2019 regulate Foreign Portfolio Investment in India and a foreign person interested in FPI has to approach the Designated Depository Participant (DDP) for making an application for Foreign Portfolio Investment Registration. DDP is a person or institution that has been empowered to grant registration to Foreign Portfolio Investors on behalf of SEBI. To obtain registration for a Foreign Portfolio Investor an applicant has to fulfill the requirements of the SEBI as well as the DDP. 

What are the Categories of Investment under the Foreign Portfolio Investor Registration?

Regulation 5 of the SEBI (FPI) Regulations, 2019 prescribes three categories of Foreign Portfolio Investors. Any applicant desirous of obtaining registration as a Foreign Portfolio Investor has to apply for registration under these 3 (three) categories or any other category as may be prescribed by the SEBI from time to time. The three categories prescribed are as follows:

  • Category I

Under this category, generally the government investment institutions are registered. They involve foreign government and foreign government-related investors such as central banks, Sovereign wealth funds, International or multilateral organizations, pension funds, etc.

  • Category II

Under this category, the investors who do not fall under Category I are covered. Usually, big investors such as Mutual Funds, banks, portfolio managers, insurance companies, investment managers, etc are registered under this category.

  • Category III

Under this category, those foreign portfolio investors are registered who neither fall under Category I nor Category II. These are generally small foreign investors. Some examples of investors who fall under this category are individual investors, societies, trusts, companies, charitable foundations, etc. 

What are the Eligibility Criteria to apply for a Foreign Portfolio Investor?

An application for registration as a Foreign Portfolio Investor shall be considered by a DDP only if the applicant satisfies the following conditions namely:

  • The applicant should not be a resident of India;
  • The applicant should not be a non-resident Indian (NRI) or an Overseas Citizen of India (OCI);
  • Resident Indian (RI), NRIs, and OCIs may be eligible for registration subject to the condition that the contribution in case of single NRI or OCI or RI shall be below 25% of the total contribution in the corpus of the applicant and in other cases the aggregate contribution of NRIs, OCIs and RIs should be below 50% of the total contribution in the corpus of the applicant;
  • The applicant should be resident of a country whose securities market regulator is a signatory of the International Organization of Securities Commission's (IOSC) Multilateral MOU or a signatory to a bilateral MOU with SEBI. Further, the Government or Government related investors shall be eligible for registration only if they are residents of a country that has been approved by the Government of India;
  • If the applicant is a foreign banker then the Central bank of the applicant’s resident country should be a member of the Bank for International Settlements. However, the applicant is not mandated to be a member of the Bank for International Settlements (BIS);
  • The applicant should not be resident of the country identified in its public statement of Financial Action Task Force as a country having deficiencies in its Anti-Money Laundering laws or a country that has not made sufficient progress in addressing such deficiencies.
  • The applicant should be fit and proper as per the criteria prescribed in Schedule II of the SEBI (Intermediaries) Regulations, 2008;
  • The applicant must satisfy any other criteria as may be prescribed by SEBI from time to time. 

What are the Documents required for Foreign Portfolio Investor Registration?

For obtaining the certificate of registration as Foreign Portfolio Investor, the applicant must possess the following Documents:

  • Proof of Address of the applicant
  • Memorandum of Association and Article of Association, in case the applicant is a company
  • Pan Card
  • ID proof such as passport
  • Details of Directors
  • Details of beneficial owners of the company
  • Copy of Board Resolution
  • Signatures of authorized signatories including those of members or shareholders
  • FATCA or the CRS Form
  • Form 49AA
  • Other Documents pertaining to business information associated with the applicant

In order to ease the on-boarding process of Foreign Portfolio Investors and reduce the time taken for registration, the SEBI issued a SEBI Circular No. SEBI/HO/AFD/P/CIR/2023/043 on 27th March 2023 in furtherance to the SEBI (FPI) (Amendment) Regulations, 2023 notified on 14th March 2023 to streamline the on-boarding process and has allowed DDP to grant registration based on scanned copies of CAF, supporting Documents and fees submitted by the applicant. Further, use of digital signatures has been allowed for the purpose of execution of CAF and other registration Documents. 

What are the steps for Procuring Foreign Portfolio Investor Registration?

Nobody can deal in securities as a foreign portfolio investor without obtaining a certificate of registration issued by DDP. For obtaining registration, the Foreign Portfolio Investor has to follow the following procedure: 

Step 1: Make an application to the DDP

An application for a grant of certificate of registration should be made to the DDP in the form and manner as prescribed by SEBI from time to time under the SEBI (FPI) Regulations, 2019. If an applicant desires to register as a Foreign Portfolio Investor he or she can also use the online method by visiting the website of National Securities Depositories Limited (NSDL) and filling out the Common Application Form (CAF). 

Step 2: Fee for Registration

As per regulation 3 reads with regulation 7(3) of the SEBI (FPI) Regulations of 2019, an applicant has to pay the registration fees to DDP as prescribed in Second Schedule to the Regulation. The Fees prescribed by SEBI under the Second Schedule of SEBI (FPI) Regulations, 2019 are as follows:

  • For Category I Foreign Portfolio Investors - US$ 2500
  • For Category II Foreign Portfolio Investors- US$ 250
  • For Category III Foreign Portfolio Investors- NA

Category I and II foreign portfolio investors have to pay registration fees every three years till their registration subsists. However, International or multilateral agencies established outside India for providing aid and have been exempted from payment of taxes and duties by the Central Government shall also be exempted from payment of registration fees. 

Step 3: Review of Application

After receiving an application, the DDP reviews it. The application has to be processed within 30 (thirty) days from the date of making the application. The DDP may call for further information as may be considered necessary for the grant of registration. If required by the DDP or SEBI, the applicant or his authorized representative has to appear before them personally in connection with the grant of certificate of registration. 

Step 4: Grant of Approval

If the DDP is satisfied that the application is genuine and there are no issues in the application then the DDP issues the certificate of registration bearing the registration number. The registration number is generated by the NSDL.

If the applicant furnishes any false, misleading, or deceptive information in the application, then the application can be rejected by the DDP by communicating the decision to reject the application and by giving an opportunity of being heard to the applicant. Thereafter, the applicant has to apply for reconsideration of the application by making improvements in the application within 30 days from the date of communication from the DDP. 

Step 5: Collection of Fees

The applicants pay the registration fees to the DDP in advance in every three years. The DDP remits the same to the SEBI. The fee is remitted only after the certificate of registration is granted to the applicant. Further, the remittance has to be done by the 5th working day of every month along with the details of Foreign Portfolio Investors in the prescribed format. 

What is the Online Process for the Registration of Foreign Portfolio Investors?

The Government of India notified the Common Application Form (CAF) on 27th January 2020 for the registration of Foreign Portfolio Investors with SEBI. The steps to access and fill out the CAF for making an application for registration as a Foreign Portfolio Investor is as follows:

  • Any eligible person who desires to apply for registration as a Foreign Portfolio Investor is required to fill, either directly or through a global custodian, the CAF form available on the website of NSDL ( in an electronic manner.
  • For getting access to the CAF, the applicant or the global custodian is required to create a user id on the NSDL website.
  • The applicant or the global custodian must fill out the CAF as notified by the SEBI.
  • After duly filling out the application form and uploading the supporting Documents, the applicant or the global custodian has to submit the application to the appointed DDP in India in an electronic manner.
  • Thereafter, the applicant has to print, sign and submit the application form to the DDP in the physical form along with the requisite Documents.
  • On receiving the form and requisite Documents, the DDP shall review the form and register it.
  • After reviewing, if the application is accepted then the certificate of registration is granted to the Foreign Portfolio Investor and the same shall also be forwarded by DDP to the Income Tax Department for PAN generation.
  • The NSDL has integrated the Registration Portal for Foreign Portfolio Investors with that of the Income Tax Department for the generation of PAN for Foreign Portfolio Investors.
  • When PAN is generated bu the Income Tax Department, the PAN number is intimated to the applicant. 

What are the circumstances in which the certificate granted can be suspended, canceled, or surrendered?

The certificate of registration granted to a Foreign Portfolio Investor can be canceled and suspended for various reasons in the manner provided in Chapter V of the SEBI (Intermediaries) Regulations, 2008.

The suspension of the certificate can take place when the Foreign Portfolio Investor fails to pay the required fee for continuation of the registration within the due date prescribed and also does not have any cash or security or derivative position in India. In such instances, it is considered as though the Foreign Portfolio Investor has surrendered its registration. The DDP of such Foreign Portfolio Investor shall undertake the surrender process after obtaining approval from SEBI. If for any other reason, the Foreign Portfolio Investor is willing to surrender the certificate of registration, it can do so by requesting DDP for the surrender of the certificate. The DDP shall allow the surrender of the certificate after obtaining approval from the SEBI and may also impose such conditions on the Foreign Portfolio Investor as may be specified by the SEBI.



Frequently Asked Questions

Foreign Portfolio Investment is an investment made by investors who are willing to invest in a foreign country. FPI involves holding financial assets like stocks, bonds, mutual funds, pension funds, ETFs, etc in a foreign country.

FPIs are investments in the financial assets of the foreign company to an extent of 10% of the total issued capital of the company. Further, the investor does not actively hold the financial assets under FPIs. Whereas FDIs are investments in the capital instruments of the foreign company and provide ownership in the company's assets and decision-making. Any investment which exceeds 10% of the total issued capital of a company shall be considered an FDI. .

FPIs are regulated by the Securities Exchange Board of India which is the security market regulator in India.

The Foreign Portfolio Investments are valid permanently unless suspended or canceled by the DDP or surrendered by the foreign portfolio investor himself. However, the validity is subject to the payment of registration/renewal fees every three years.

The maximum ceiling limit of FPI shareholding in an Indian company is 10%of the total share capital issued.

Yes, FPI is less risky and more liquid as compared to FDI because in FPI the investor does not have direct control over the company assets.

The security market regulator of the resident country of the Foreign Portfolio Investor must be a signatory to the MOU of the International Organization of Securities Commissions or a signatory to the bilateral MOU entered with the SEBI. In addition to this, the resident country should not have been identified in the public statement of the Financial Action Task Force. In case the applicant is a bank, then the central bank of the applicant's resident country should be a member of the Bank for International Settlement. In this way, the rules of resident country affect the registration of Foreign Portfolio Investor in India.



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