The Securities and Exchange Board of India (Sebi) on Friday proposed an increase in the investment threshold for granular disclosures by foreign portfolio investors (FPIs). The current threshold, set at Rs 25,000 crore, will be raised to Rs 50,000 crore under the proposed amendments.
This move, outlined in a consultation paper released by Sebi, is attributed to a substantial rise in daily market turnover.
Under the existing framework, FPIs holding more than 50% of their Indian equity assets under management (AUM) in a single Indian corporate group or exceeding Rs 25,000 crore in Indian equity AUM are required to provide detailed disclosures of their holdings.
Sebi introduced this framework in August 2023 to address concerns related to circumventing minimum public shareholding (MPS) norms and other regulations.
"The ‘potential to disrupt the functioning of market’ has to be evaluated relative to the size of the market," Sebi stated in the paper. "In this regard, a broad market parameter such as turnover can be used as a factor to assess the size of market."
Supporting this decision, market players cited increased market liquidity and the recent depreciation of the rupee as contributing factors.
Sebi has invited public comments on these proposals until January 31, 2025.