SEBI has Issued an Operational Guidelines for FPI, DDP, and EFI

SEBI has Issued an Operational Guidelines for FPI, DDP, and EFI

SEBI had issued an operational guidelines for the foreign Portfolio Investors (FPIs), Designated Depository Participants (DDPs) as well as Eligible Foreign Investors (EFIs) in order to facilitate the application of SEBI (Foreign Portfolio Investors) Regulations, 2019

The Securities and Exchange Board of India in a circular dated on 5th November 2019 made to the Foreign Portfolio Investors; Custodians and Designated Depository Participants;  The Depositories; All recognized Stock Exchanges and Clearing Corporations in International Financial Services Centers; and All recognized Stock Exchanges/ Clearing Corporations, relating to the subject of  the operational guidelines for FPIs and DDPs under SEBI (Foreign Portfolio Investors), Regulations 2019 and for Eligible Foreign Investors had stated that;

SEBI (Foreign Portfolio Investors) Regulations, 2019 (“the Regulations”) had notified and became effective from 23rd September 2019.

In order to operationalize the Regulations, it was decided to issue needed guidance under regulation 44 of the Regulations to make certain the effective transition from SEBI (Foreign Portfolio Investors) Regulations, 2014.

The guidance has been issued in the form of the Operational Guidelines which are annexed below*.

However, the existing Circulars, FAQs, operating guidelines, as well as other guidance which has been issued by the SEBI from time to time would stand withdrawn with the issuance of the Operational Guidelines.
This particular circular has been issued in exercise of powers provided under Section 11 (1) of the Securities and Exchange Board of India Act, 1992.

A copy of this circular is accessible at the web page “Circulars” on SEBI’s website www.sebi.gov.in. The custodians are requested towards bringing the contents of this circular relating to the notice of their FPI clients.

*Enclosed: Operational guidelines for FPIs & DDPs and EFIs – 


Under the new norms as issued by SEBI relating to the operational norms in order to facilitate rollout of new FPI regulations, all the insurance entities as well as funds from FATF member nations have been classified as category-I FPIs

Amongst others, the unregulated funds or entity where the regulated investment administrator is from non-FATF member nation shall be under category-II.

In order to make certain the transition of existing FPIs, re-categorization of registration has been done by NSDL in consultation with the particular designated depository participants (DDPs).

An FPI could seek re-categorization from Category-II to I after furnishing necessary information as well as applicable fees to the DDP.

SEBI had stated that these consolidated operational guidelines for foreign portfolio investors as well as designated depository participants have been issued to facilitate implementation of SEBI (Foreign Portfolio Investors) Regulations, 2019. If the aggregate investment limit were violated, the FPI concerned shall be required to sell the excess holdings only towards domestic investors, according to the guidelines.
After the holding crossed the limit, the depositories shall require informing stock exchanges relating to the breach.

SEBI also stated that in case of a breach of the sectoral cap or aggregate FPI limit or aggregate NRI limit, the foreign investors would divest their excess holding within 5 trading days from the date of settlement of the trades, through selling shares only towards the domestic investors.

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