New Concessions for Foreign Portfolio Investors (FPI) – SEBI Reforms

Introduction

SEBI (Securities and Exchange Board of India) is the key regulatory body controlling India’s capital market. Recently, several reforms have been announced to attract Foreign Portfolio Investors (FPI) and improve market efficiency. This is an effort to make India’s stock market globally competitive.

1. Changes in FPI Transaction Rules

Earlier, full payment had to be made separately for buying and selling. Now, under the Net Settlement System, only the net amount needs to be paid. Benefits include: reduction in financial burden, lower forex costs, increase in market liquidity.

2. REIT & InvIT Reforms

Investment continuation is allowed even after the tenure ends. Also, up to 10% investment in new projects is permitted. This supports infrastructure development, real estate funding flow, and encouragement of long-term investments.

3. Corporate Regulation Changes

When a company is wound up, it will not be immediately treated as “Default”. Final court judgment will be awaited. This ensures investor protection and a fair legal approach.

4. Alternative Investment Funds (AIF)

Simplified rules for inactive AIFs have been introduced. Regulatory burden is reduced until registration cancellation. This leads to reduced administrative burden.

5. Social Contribution Funding

In the Social Stock Exchange, minimum investment reduced from ₹2 lakh to ₹1,000. This will increase public participation and funding support for social welfare projects.

6. SEBI – Key Facts

Established: 1988 (Statutory status – 1992). Operates under the SEBI Act, 1992. Its main roles include: investor protection, market regulation, fraud prevention.

Conclusion / Way Forward

These SEBI reforms will make India’s stock market more efficient. They will increase foreign investment, support infrastructure development, and expand public participation. This will strengthen Financial Market Deepening and Economic Growth.