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The Securities and Exchange Board of India (SEBI) has relaxed Know Your Customer (KYC) requirements for foreign portfolio investors (FPIs), extending the review cycle to eight years for eligible investors and removing certain registration-related compliance requirements to reduce paperwork and promote ease of doing business, the market regulator said in a circular.
Under the existing framework, FPIs were required to undergo periodic KYC reviews every one or three years, depending on their jurisdiction, category and regulatory status. However, under the revised framework, Category I FPIs from non-high-risk jurisdictions will undergo KYC reviews once every eight years. The provisions of this circular shall come into force with effect from December 01, 2026, SEBI said. For Category I FPIs from high-risk jurisdictions, those registered under Regulation 5(a)(i) will also be eligible for an eight-year review cycle, while other investors in this category will undergo reviews every two years. Similarly, regulated Category II FPIs from non-high-risk jurisdictions will be subject to KYC reviews every eight years, while other Category II investors will continue to undergo reviews every two years. Category II FPIs from high-risk jurisdictions will also be required to complete KYC reviews every two years. The regulator clarified that the existing review requirements for government securities-only FPIs (GS-FPIs) and SWAGAT-FI (Single Window Automatic and Generalised Access for Trusted Foreign Investors) FPIs will remain unchanged. For GS-FPIs, KYC reviews will continue to follow the periodicity applicable to their respective bank accounts under Reserve Bank of India (RBI) guidelines, while SWAGAT-FI FPIs will retain their 10-year review cycle. Apart from extending the KYC review period, SEBI has also removed the requirement for FPIs to intimate changes in previously submitted information or provide a no-change declaration at the time of continuing their registration. Under the revised provisions, FPIs seeking to continue their registration for another three-year period, or 10 years in the case of SWAGAT-FI, will be required to pay the applicable fees to their Designated Depository Participants (DDPs). Also, FPI shall pay the fees for continuance of its registration at least 15 days prior to current validity of its registration in order to facilitate a smooth continuance process, it said. As per Paragraph 5 of Part B of SEBI's Master Circular for FPIs, DDPs and Eligible Foreign Investors dated May 30, 2024, periodic KYC reviews were intended to ensure that documents, data and information collected during due diligence remained up to date and relevant through reviews of existing records. Under the earlier framework, Category I FPIs from non-high-risk jurisdictions were required to undergo KYC reviews every three years during the continuance of registration, while Category II FPIs from high-risk jurisdictions were subject to annual reviews. The framework also required custodians to seek confirmation from FPIs regarding any changes in previously submitted documents or information at the time of KYC review, with updated details to be provided wherever changes had occurred. (ANI)
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