Foreign portfolio investors (FPIs) and institutional investors got relief on ‘know your customer attributes as the Securities and Exchange Board of India (Sebi) has reportedly eased an earlier order requiring FPIs and institutional investors to disclose their personal information such as mobile numbers and income range with the capital market regulator.
On July 30, the National Securities issued a directive, mentioning that institutional investors, including offshore funds can divulge either the mobile number or the office landline number. Plus, it will no longer be compulsory for them to provide income details to the Sebi.
Top multinational banks, which act as custodians to operate the account of their FPI clients, had conveyed to the regulator that overseas investors were reluctant to disclose personal details such as mobile numbers and income details on the grounds of data privacy, according to a report in ET.
The financial daily quoted an official with a market intermediary as saying, “We believe that reluctance has only increased following the snooping controversy. Custodians had told Sebi that they already have the mobile number and email ID of compliance officers of foreign funds.”
Many market commentators are of the view that improvements in the scenario on the deadly virus front in the country and a pick-up in the Covid-19 vaccination drive have attracted higher FPIs investments in Indian markets, which has climbed a new high this week.
Another person familiar with the matter told the publication that the market regulator probably felt that given the confidentiality concerns this would not work, and it had deferred the deadline twice. Plus, it was not a realistic approach as compliance officers or main persons in a fund or institution may leave or their numbers may change. Earlier, Sebi had alerted that failure to update may result in blocking of accounts of existing FPIs.
All non-institutional investors will, however, have to upgrade all details such as mobile number, income range, and email ID on a regular basis. As per the latest instruction, the new deadline for existing clients is September 30, 2021. For new accounts, the six KYC attributes— name, address, PAN (permanent account number), valid mobile number, email ID and income range—will be mandatory from August 1.
Over the last few years, the market regulator has been gathering details from custodians on ultimate beneficial owners of FPIs. Further, it has kept a close tab on the total contribution of non-resident Indians (NRIs) in a fund pool.
The custodians had said that the KYC for FPIs were finalised after discussion with the Ministry of Finance and Sebi, and incorporating additional pieces of information that are not needed as part of risk-based KYC norms, would require changing the application form for FPIs.
