**Summary:**
This circular, reference number SEBI/HO/FPIC/P/CIR/2021/609, dated August 04, 2021, issued by the Securities and Exchange Board of India (SEBI), addresses modifications in operational guidelines for Foreign Portfolio Investors (FPIs) and Designated Depository Participants (DDPs) following amendments to the SEBI Foreign Portfolio Investors Regulations, 2019. The key change operationalizes an amendment to Regulation 4, clause (c) of the SEBI Foreign Portfolio Investors Regulations, 2019, gazetted under Notification No. SEBI/LAD-NRO/GN/2021/32 on August 03, 2021. This amendment aims to facilitate resident Indian fund managers in benefiting from Section 9A of the Income Tax Act, 1961, which was introduced to encourage fund management activity related to offshore funds within India. Specifically, the explanation under Para 2 (ii) (b) of Part A of the Operational Guidelines for FPIs and DDPs (circular dated November 05, 2019) is modified to state that resident Indian individuals' contributions should be made through the Reserve Bank of India's Liberalised Remittance Scheme (LRS) and invested in global funds with less than 50% Indian exposure. DDPs and Custodians are requested to inform their clients about these changes. The circular is issued under the authority of Section 11(1) of the Securities and Exchange Board of India Act, 1992. The circular is available on the SEBI website (www.sebi.gov.in) under the "Circulars" section. For further information, contact Amit Tandon, General Manager, at 022-26449373 or amitt@sebi.gov.in.
Key Entities Referenced
Foreign Portfolio Investors: An entity that invests in foreign financial markets.
Designated Depository Participants: An entity participating in the depository system as defined by SEBI.
NSDL: National Securities Depository Limited, an Indian central securities depository.
CDSL: Central Depository Services Limited, an Indian central securities depository.
SEBI Foreign Portfolio Investors Regulations, 2019: Regulations governing Foreign Portfolio Investors as defined by the Securities and Exchange Board of India.
Income Tax Act, 1961: An act of the Parliament of India that governs the levy, administration, collection and recovery of income tax in India.
Finance Act 2015: An act of the Parliament of India which introduced Section 9A to the Income Tax Act, 1961.
Liberalised Remittance Scheme: A scheme managed by the Reserve Bank of India allowing resident individuals to remit funds abroad.
CIRCULAR
SEBI/ HO/ FPI&C/ P/ CIR/ 2021/ 609
August 04, 2021
To
1. Foreign Portfolio Investors (“FPIs”)
2. Custodians and Designated Depository Participants ("DDPs")
3. The Depositories (NSDL and CDSL)
4. All recognized Stock Exchanges and Clearing Corporations
Dear Sir/ Madam,
Sub: Modification in Operational Guidelines for FPIs and DDPs pursuant to
amendment in SEBI (Foreign Portfolio Investors) Regulations, 2019
1. Section 9A of the Income Tax Act, 1961 (IT Act) was introduced by the Finance Act
2015 and subsequently amended vide Finance Act 2020 to facilitate setting up of fund
management activity in India with respect to offshore funds.
2. In order to enable Resident Indian fund managers to benefit from the provisions of
Section 9A, clause (c) of Regulation 4 of the SEBI (Foreign Portfolio Investors)
Regulations, 2019, has been amended vide Gazette Notification No. SEBI.LAD-
NRO/GN/2021/32 dated August 03, 2021 (enclosed).
3. For operationalizing the aforementioned amendment to the SEBI (Foreign Portfolio
Investors) Regulations, 2019, the Explanation provided under Para 2 (ii) (b) of Part A
of the Operational Guidelines for FPIs and DDPs, issued vide circular dated
November 05, 2019, stands modified as below:
“Explanation: The contribution of resident Indian individuals shall be made
through the Liberalised Remittance Scheme (LRS) notified by Reserve Bank
of India and shall be in global funds whose Indian exposure is less than
50%.”
4. DDPs and Custodians are requested to bring the contents of this circular to the notice
of their clients.
5. This circular is issued in exercise of the powers conferred by Section 11(1) of
Securities and Exchange Board of India Act, 1992.
Page 1 of 26. A copy of this circular is available at the web page “Circulars” on our website
www.sebi.gov.in.
Yours faithfully,
Amit Tandon
General Manager
Tel. No: 022-26449373
Email id: amitt@sebi.gov.in
Enclosed: Gazette Notification No. SEBI.LAD-NRO/GN/2021/32 dated August 03 ,2021
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