SEBI Simplifies FPI Settlement Rules and Lowers SIF Investment Minimum
Synopsis
SEBI's recent decisions aim to enhance market efficiency by allowing net settlement for FPIs and reducing investment thresholds for retail investors in Social Impact Funds. Discover how these changes can impact your investment strategies.
Key Takeaways
Net settlement for FPIs: Effective December 31, 2026, allowing easier cash market transactions.
Lowered investment minimum: Individual investors can now invest less in Social Impact Funds.
Inoperative funds: Certain AIFs can operate with reduced compliance.
InvITs flexibility: Continued investment in SPVs post-concession agreement.
Diverse investment avenues: InvITs and REITs can invest in liquid mutual funds to reduce risk.
New Delhi, March 23 (NationPress) The Securities and Exchange Board of India (SEBI) announced on Monday that it has permitted Foreign Portfolio Investors (FPIs) to engage in net settlement for their funds during intraday cash market transactions, alongside other initiatives aimed at facilitating business operations.
Additionally, the regulator has greenlit changes to the AIF Regulations to address circumstances where a scheme or an AIF can retain liquidation proceeds of portfolios after the completion of their tenure.
SEBI has also introduced a framework for categorizing certain AIFs as 'inoperative funds', which will be subject to less stringent compliance requirements until the surrender of their registration certificate, further enhancing the ease of doing business.
This relaxation for FPIs, set to take effect on December 31, 2026, is designed to alleviate liquidity pressures and reduce funding costs, especially during high-volume trading events like index rebalancing.
Currently, FPIs settle transactions with custodians on a gross basis, which incurs additional costs, including funding expenses and foreign exchange slippages.
SEBI's announcement reassures that non-outright transactions will still be confirmed and settled on a gross basis, addressing concerns regarding potential market manipulation stemming from substantial FPI positions or speculative trading practices.
Moreover, SEBI has lowered the minimum investment threshold for individual investors in the Social Impact Fund (SIF) under the AIF Regulations of 2012, aiming to boost retail participation.
This adjustment aligns the minimum application size for subscribing to Zero Coupon Zero Principal Instruments under SEBI Regulations with the revised minimum investment requirement for individual investors in the Social Impact Fund, as noted by the market regulator.
Another initiative to ease business processes involves SEBI allowing Infrastructure Investment Trusts (InvITs) to maintain investments in Special Purpose Vehicles (SPVs) following the end or termination of the concession agreement.
To offer additional investment avenues for temporary fund deployment by InvITs and Real Estate Investment Trusts (REITs) and to mitigate concentration risks, the regulator will also permit these entities to invest in units of liquid mutual fund schemes where the credit risk value is at least 10.
aar/pk
Point of View
SEBI's latest measures reflect a commitment to improving the investment landscape in India, ultimately fostering a more robust financial ecosystem.
NationPress
10 May 2026
Frequently Asked Questions
What are the new settlement norms for FPIs announced by SEBI?
SEBI has permitted Foreign Portfolio Investors to engage in net settlement of their funds for intraday cash market transactions, effective December 31, 2026.
How has SEBI altered the investment requirements for individual investors?
SEBI has reduced the minimum investment threshold for individual investors in the Social Impact Fund to encourage greater retail participation.
What is the significance of tagging AIFs as 'inoperative funds'?
This tagging allows certain AIFs to operate with lighter compliance requirements until they surrender their registration certificate, thus simplifying business operations.
What changes were made regarding InvITs and SPVs?
SEBI has allowed InvITs to retain investments in SPVs after the conclusion of the concession agreement, providing more flexibility in fund management.
What are the new investment options for InvITs and REITs?
InvITs and REITs can now invest in units of liquid mutual fund schemes with a credit risk value of at least 10, which helps diversify their investment portfolios.
