The Government has been constantly working to promote foreign investment in the country. Investor friendly policies such as Foreign Portfolio Investment have seen a number of amendments. These investments are made by foreign investors (hereinafter referred to as “Foreign Portfolio Investors” or “FPI”) through capital instruments and are highly liquid indicating the indirect control of the investor in the management.
Bottlenecks faced by FPIs
The FPIs had been dealing with the cumbersome procedure involved to file a separate form to register themselves with the Securities and Exchange Board of India (hereinafter referred to as “SEBI”). Also, they had to approach the banks for opening accounts, income tax department for Permanent Account Number (hereinafter referred to as “PAN”) and market intermediaries for dematerialization accounts for the purpose of carrying out foreign portfolio investment in India.
Solution by the Government
With a view to simplify the process of investment and enhance the operational flexibility while ease of access to Indian capital markets, SEBI, Reserve Bank of India and Central Board of Direct Taxes has introduced a single application form for registration for FPIs.
Advantages of the Single Application Form
The single application form for FPIs allows registration with the SEBI, allotment of PAN and ‘Know Your Customer’ requirements for opening bank and dematerialization accounts. This aims to reduce time and money of the investors. It is also aligned with the Government’s approach of ease to do business in India.
The Government has been working towards increasing facilitation of foreign portfolio investment in India. Earlier, on August 21, 2018, SEBI had extended the deadline of ‘Know Your Customer’ compliances for FPIs. Now, with the investor friendly single application form, foreign portfolio investment in India is likely to see a substantial increase.