A crucial job for a market regulator, particularly in developing countries, is to ease the path for capital to flow into businesses without compromising on the integrity of rules. Since he took over as Sebi chairman in March, Tuhin Kanta Pandey has been meeting FPIs who, together with offshore long-term strategic investors and PE houses, bring in funds that back BoP arithmetic. For a country with a negative trade deficit, inflows from overseas investors are critical for the currency and the economy. So, at a time when stock markets are choppy, local corporates are shy to commit large capex, bond prices are sending confusing signals, and US tariff barriers cast a shadow on current account deficit, Sebi is reportedly drawing up plans for the right moves.
FPIs have been asking Sebi to increase tenure of their licences from 3 to 5 years, introduce easier KYC, exempt large private funds from granular disclosures, and review the rule that requires disclosure of identities of all natural persons behind investors in a fund. Since the timing of raising funds is important for the stock-issuing company and institutional investors in the primary market, Sebi should consider the possibility of shortening the time for clearance of maiden equity offerings, giving more latitude to low-risk FPIs in attracting investments from NRIs, and using domestic institutions to act as sponsors and managers of FPIs based in GIFT City. Sebi is reportedly examining giving mega IPOs a longer period to raise the minimum public holding to 25%.
A few of these measures have been mooted in some of Sebi's consultation papers, and may well be examined in its next board meeting. However, amid global uncertainties, when countries are vying with each other for markets and capital, Sebi must quickly release operational circulars to make board decisions functional in the market and must ensure a regulatory regime where genuine investors don't pay the price for sharp practices of a handful.
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FPIs have been asking Sebi to increase tenure of their licences from 3 to 5 years, introduce easier KYC, exempt large private funds from granular disclosures, and review the rule that requires disclosure of identities of all natural persons behind investors in a fund. Since the timing of raising funds is important for the stock-issuing company and institutional investors in the primary market, Sebi should consider the possibility of shortening the time for clearance of maiden equity offerings, giving more latitude to low-risk FPIs in attracting investments from NRIs, and using domestic institutions to act as sponsors and managers of FPIs based in GIFT City. Sebi is reportedly examining giving mega IPOs a longer period to raise the minimum public holding to 25%.
A few of these measures have been mooted in some of Sebi's consultation papers, and may well be examined in its next board meeting. However, amid global uncertainties, when countries are vying with each other for markets and capital, Sebi must quickly release operational circulars to make board decisions functional in the market and must ensure a regulatory regime where genuine investors don't pay the price for sharp practices of a handful.
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