Impact of revised KYC norms on NRIs

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Capital markets regulator Securities and Exchange Board of India (Sebi) in April introduced eligibility norms for foreign portfolio investors (FPIs) and new know-your-customer (KYC) rules. The norms inter-alia comprised of various additional disclosure requirements and casted an onerous compliance responsibility on FPIs operating in India.

Considering stakeholder representations and the recommendations of the working group constituted for this purpose, Sebi has recently issued two circulars — one for the purpose of providing the revised eligibility norms for FPIs (eligibility circular) and another circular providing the revised KYC norms (KYC circular) .

Revised eligibility norms for FPIs

According to the eligibility circular, the ‘Beneficial Ownership’ criteria provided under the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 (PMLA Rules), would apply only for the purpose of KYC and not for determining the eligibility criteria of the FPI .

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