Sebi Simplifies FPI Registration Rules From December 1, Extends KYC Review Cycle

The Securities and Exchange Board of India (Sebi) has eased Know Your Customer (KYC) requirements for Foreign Portfolio Investors (FPIs), extending the review period from the existing one to three years to two to eight years, depending on the investor category and jurisdiction.

The revised norms will come into effect from December 1, 2026. Sebi has also removed the requirement for FPIs to separately report changes in previously submitted information or provide a no-change confirmation when continuing their registration.

In a circular dated October 30, Sebi said the changes were aimed at reducing repetitive compliance requirements and making it easier for foreign investors to do business in India.

Under the existing framework, FPIs are required to undergo KYC reviews annually or once every three years, depending on their category, jurisdiction and regulatory status. The revised framework increases these intervals to two years and eight years.

Sebi Revises FPI KYC Review Period

The revised KYC review frequency will depend on whether an FPI belongs to Category I or Category II and whether it is registered in a high-risk or non-high-risk jurisdiction.

For Category I FPIs registered under Regulation 5(a)(i) in high-risk jurisdictions, the KYC review period has been extended to eight years. Other Category I FPIs in high-risk jurisdictions will have to undergo reviews every two years.

Category II FPIs in high-risk jurisdictions will continue to undergo KYC reviews every two years.

For FPIs registered in non-high-risk jurisdictions, the review period will be eight years for all Category I investors. For Category II FPIs, regulated entities will have an eight-year review cycle, while others will have to complete the process every two years.

The changes are part of Sebi's effort to reduce the compliance burden on foreign investors without changing the existing requirements for certain categories of FPIs.

Existing KYC Relaxations For GS-FPIs, SWAGAT-FI To Continue

Sebi has left the existing KYC review arrangements for FPIs investing only in Government Securities (GS-FPIs) and SWAGAT-FI FPIs unchanged.

GS-FPIs will continue to follow the KYC review schedule applicable to their respective bank accounts, as prescribed by the Reserve Bank of India (RBI).

For SWAGAT-FI FPIs, the review period will remain 10 years.

Sebi Removes No-Change Declaration Requirement

Sebi has also done away with the requirement for FPIs to separately intimate changes in information submitted earlier or furnish a no-change declaration at the time of continuing their registration.

Under the revised rules, FPIs seeking to continue their registration for the next three-year block will only have to pay the applicable fees to their Designated Depository Participants (DDPs). The continuation period for SWAGAT-FI FPIs will remain 10 years.

Earlier, FPIs, other than those investing only in Government Securities, were required to report changes in previously submitted information or provide a separate confirmation that no changes had taken place when seeking continuation of registration.

The removal of this requirement is expected to reduce repetitive paperwork for foreign investors.

FPIs Must Pay Continuation Fees 15 Days Before Registration Expiry

Sebi has also specified a timeline for paying continuation fees. FPIs must pay the applicable fees to their Designated Depository Participants (DDPs) at least 15 days before the expiry of their existing registration.

A DDP is the Sebi-authorised intermediary that handles registration, KYC and other regulatory formalities for FPIs in India.

The requirement is intended to give DDPs sufficient time to complete the continuation process before the registration expires.

The regulator has directed depositories, custodians and DDPs to make the necessary changes to their systems and processes to implement the revised rules. They have also been asked to inform the concerned FPIs about the changes.