Sebi Doubles Asset Threshold For FPIs To Rs 50,000 Crore, Here’s What It Means

Capital markets regulator, the Securities and Exchange Board of India (Sebi) on April 9, 2025 increased the asset threshold for foreign portfolio investors (FPIs) to Rs 50,000 crore, up from the existing Rs 25,000 crore. That means only FPIs with over Rs 50,000 crore in equity asset under management (AUM) in Indian markets must disclose details of all entities that have any ownership, economic interest, or control, to the market regulator.

This has been done keeping in view the increased trading volumes in the cash equity market, which has nearly doubled in the previous three years. In FY23, the total annual turnover was Rs 10,28,864.92 crore, which increased to Rs 19,33,906.84 by FY25 end.

The size criteria was put in place to prevent large FPIs with huge Indian equity portfolios from bypassing rules, which could disrupt the smooth functioning of India’s securities markets.

In August 2023, Sebi had mandated FPIs, who hold more than 50 per cent of their equity AUM in a single corporate group, or with total holdings over Rs 25,000 crore in Indian markets, to disclose detailed information of all entities with ownership, economic interest, or control in the FPI.

Why Sebi Wants Additional Information From FPIs

Sebi is concerned that FPIs with large, concentrated investments in one company or group could disrupt the smooth functioning of India’s stock markets. Large holdings might be misused and cause market instability.

“This specific requirement was to guard against any potential circumvention of Press Note 3 stipulations by large-sized FPI with the potential to disrupt the orderly functioning of markets by their actions,” the regulator had previously said in a release.

Sebi is also concerned that some companies might use the FPI route to avoid important regulations. This includes bypassing rules on share ownership disclosure or failing to meet requirements for public shareholding in listed companies.

What is Press Note 3

The government had issued the Press Note 3 (2020) during the Covid-19 pandemic to prevent foreign investors from taking over struggling Indian companies at cheap prices.

It amended the foreign direct investment (FDI) policy, requiring investors from countries that share a border with India, or whose beneficial owners are from those countries, to invest only through the government route. This means they need official approval for investments in India, unlike the automatic route, where investments don’t require prior approval. The rule also applies if there’s a change in ownership that falls under these restrictions.