The Securities and Exchange Board of India (SEBI) on 22nd September 2018, has made the Know Your Client (KYC) requirements norms easier for the Foreign Portfolio Investors (FPIs).
The market regulator SEBI, relaxed the norms after considering the interim recommendations of the SEBI working group under the Chairmanship of Harun R Khan, a former deputy governor of the Reserve Bank of India.
The SEBI also focussed that the beneficial ownership criteria in Prevention of Money Laundering (Maintenance of Records) Rules, 2005 (PMLA Rules) should be made applicable for purpose of KYC and not for determining the eligibility of FPIs.
As per the PMLA Rules, the clubbing of investment limit for FPIs should not be done on the basis of beneficial owner (BO). Accordingly, there will be a separate set of norms for determining conditions where NRIs, overseas citizens of India (OCIs) and resident Indians (RIs) are constituents.
The KYC review, including changes in BOs and their holdings, is done based on risk categorisation of FPIs, according to SEBI norms.