India's SEBI to Slash Foreign Investor Registration Time
India's market regulator, SEBI, is pushing to digitize the registration process for Foreign Portfolio Investors (FPIs). The goal is to cut the approval time from 30 days down to less than a week, a move that could significantly increase the velocity of foreign investment into the country's markets and, indirectly, its startup ecosystem.
The proposed shift to a fully digital process is a significant change from the current system, which often requires physical submission of documents. SEBI Chairman Tuhin Kanta Pandey noted that while the regulator's internal processing time averages 30 days, the actual experience for an FPI could be two to three months due to back-and-forth communication with custodians. The new system aims for a five-day turnaround by consolidating requirements from SEBI, the RBI, and tax authorities into a single portal. This initiative is part of a broader effort by SEBI to streamline the FPI framework and enhance the ease of doing business. Recent changes include simplifying the registration for some FPIs with an optional abridged application form and introducing the use of digital signatures. These measures are designed to make Indian markets more attractive and accessible to a wider range of foreign funds, thereby increasing liquidity. The digitization effort involves creating a market access portal to clarify all necessary documentation and processes for prospective portfolio investors. By moving away from "wet signatures" and physical document submission, which requires time-consuming apostilling and shipping, the regulator aims to dramatically compress the timeline. The goal is to make the fully digital workflow mandatory for all new registrations. Historically, SEBI has progressively simplified FPI regulations, such as introducing a Common Application Form (CAF) in 2020 to consolidate applications for registration, PAN, and bank accounts. The regulator has also recently extended the registration validity for certain classes of FPIs from five to ten years, aligning the KYC review cycle to the same period. These incremental changes have been well-received by the investment community.
