A worker cleans the glass of the Securities & Exchange Board of India in Mumbai (Photographer: Adeel Halim/Bloomberg)

SEBI To Review Foreign Fund Ownership Rules

The market regulator said a panel headed by HR Khan, former deputy governor of the Reserve Bank of India, will suggest ways to ease foreign fund ownership rules.

“The working group has heard various stakeholders, has held consultations and is in the process of giving its recommendations,” Securities and Exchange Board of India said in a statement. The Ministry of Finance has also been consulted on various issues, it said, adding that SEBI would “review the matter and shortly take a holistic view”.

The review follows concerns among assets managers that the regulator’s April 10 circular could lead to winding up or restructuring of foreign funds, leading to outflows. The new rules bar non-resident Indians, overseas citizens of India and persons of Indian origin from being beneficial owners—holding stakes above a threshold—of funds.

BloombergQuint had first reported on Sept. 5 on draft suggestions to ease the rules.

The Khan panel today met representatives from Asset Managers Round Table in India, a lobby group of fund managers, and law firms to get their views, said a person with direct knowledge of the matter requesting anonymity. Then the group deliberated ways to ease the April 10 rules and shared its views with SEBI, the person said. The regulator, according to the person, will consult the Finance Ministry before notifying any amendments.

The Asset Managers Round Table had on Monday sought changes, citing fears of foreign fund outflows worth $75 Billion. SEBI on Tuesday, however called the claim “preposterous” and irresponsible.