FPI lobby to nudge Sebi over removal of restrictions on NRI investments declared in November 2019. Here is why?
After the limitations set up by Sebi on NRI investment in November of 2019, foreign portfolio investors are planning to nudge the market regulators to ease out the limitations on non-resident Indians investments.
According to the limitation that was proposed by the Securities and Exchange Board of India(Sebi), not more than twenty five percent of any foreign fund’s AUM can be owned by an individual NRI , which in turn implies that an NRI cannot be the sole owner of more than 50 percent of the Asset under Management(AUM) by December 2020.
While Sebi did not provide any possible reasoning behind the decision, it seems the money regulator wanted to keep cases of money laundering and round tripping at bay.
According to the draft of the representation put forth by the Foreign Policy Investors, removal of these limitations would bring in more assets and aid local asset managers and would augment market depth over the course of time.
One of the people aware about the developments stated, “Covid-19 has adversely impacted all travel plans and this is significantly hurting business development. Due to lack of in-person meetings with clients, business expansion has taken a beating and funds have not seen fresh foreign inflows. This trend is likely to continue over the next six-nine months and this will definitely affect future fund-raising prospects as well. We also envisage further fund outflows. The cap on investments by NRIs through the FPI route will only make matters worse."