Market regulator Securities and Exchange Board of India’s (SEBI’s) board on Monday allowed Foreign Portfolio Investors (FPIs) net settlement of their funds on their intraday cash market transactions and announced other measures to improve ease of doing business. Further, the regulator approved proposals to amend AIF Regulations to cover situations in which a scheme or an AIF can retain liquidation proceeds of portfolio post completion of its tenure.
“It has also been approved to introduce a framework for tagging certain AIFs as ‘inoperative funds’ with lighter compliance requirements till surrender of their registration certificate,” it said to improve ease of doing business. The relaxation for FPIs, effective December 31, 2026, aims to reduce liquidity pressure and cost of funding, particularly during high-volume trading events such as index rebalancing.
Currently, FPIs settle their transactions with custodians on a gross basis which results in additional costs for FPIs, including funding costs and foreign exchange slippages. “Since non-outright transactions will continue to be confirmed and settled on a gross basis, concerns relating to potential market influence arising from large FPI positions or speculative trading activity are allayed,” the statement said.
Further, SEBI reduced the minimum value of investment by individual investors in social impact fund SIF of Under AIF Regulations 2012 to enhance retail participation. This would align the requirement of minimum application size for subscribing to Zero Coupon Zero Principal Instruments under SEBI Regulations with the requirement of minimum value of investment by individual investors in Social Impact Fund, the market regulator noted.
Another ease of doing business measure involved SEBI permitting InvITs to continue to hold investment in SPVs post conclusion or termination of the concession agreement.
“To provide additional investment options for temporary deployment of funds by InvITs and REITs and to mitigate concentration risk, InvITs and REITs will be permitted to invest in units of liquid mutual fund schemes where the credit risk value is at least 10,” it added.
