Regulator mulls single window check-in for foreign investors

Discussions held with RBI, I-T dept and tax consultants; observers say time ripe for such a move

The Securities and Exchange Board of India (Sebi) is working on a plan to ease entry norms for foreign investors.
 
According to sources, it might grant a single-window clearance mechanism, without having to get separate approvals from various regulatory bodies.  This is after representations and is aimed at easing the process of foreign portfolio investor (FPI) registration at the time of account opening.
 
At present, an investor from abroad needs clearances from Sebi, the Reserve Bank of India (RBI) and the income tax (I-T) department. The process takes at least 45-50 days. Issuance and verification of a PAN card from the I-T department takes at least 15 days. And, FPIs need to provide a copy of the card within 60 days of account opening or before remitting funds out of India, whichever is earlier.
 

Easing foreign investor filings likely
Sebi working on single-window clearance for new entrants
Registration time would be reduced to 10-15 days
Currently, the whole process takes up to 45 days
Sebi seeking inputs from tax consultants on framing new registration form
New changes to roll out from FY18

 
A regulatory official said, “The regulator is working on various aspects of making the process simpler. We have sought views from legal and tax experts on how to make the process hassle-free.” RBI and the Central Board of Direct Taxes are being involved, he said.
 
Sebi is also said to have consulted tax consultancies PwC and Deloitte.
 

Illustration: Ajay Mohanty

 
"The move will enhance operational flexibility and change the perspective of those foreign entities who are choosing other destinations," said Suresh Swamy, partner at PwC.
 
Under the current mechanism, FPIs need to apply for registration through Designated Depository Participants (DDPs). These are authorised to collate and verify the documents needed. Then, they send it to the regulator. If additional information is sought, they are required to address that within 10 days of the filing date. Then, FPIs need to apply for the PAN card and to take RBI approval for transacting in foreign currency.
 
“Any simplification of the process is always welcome. However, Sebi being a regulator, it needs to maintain adequate checks and balances, so that no opaque structures allow entities to hide the identity of beneficial owners,” said Pranay Bhatia, partner, BDO India.
 

Experts note this comes as the government is tightening the tax regime and disclosure requirements for various types of foreign funds. “Putting in place any easier registration process and operating framework will perhaps encourage investors to register as an FPI, instead of coming through the offshore derivative instrument (ODI) route,” said Yogesh Chande, partner, Shardul Amarchand Mangaldas.
 
He says ODI as a percentage of total assets of FPIs is gradually reducing with the strengthening of Participatory Note issuer norms. The FPI count in the Indian market has increased five-fold in the past two years. Experts say the move is well-timed, as India is currently a bright spot in the global markets, with more of overseas funds taking a look here. “The  stock market here is doing really well. A new investor class will keep emerging and showing interest here. The rupee getting stronger is a clear indication of global investor confidence,” said Bhatia.