 "Birds rest on the logo of the Securities and Exchange Board of India (SEBI), India's market regulator, installed on the facade of its head office building in Mumbai")
The Securities and Exchange Board of India (Sebi) will set rules to enable fund managers to manage foreign money from Indian shores.
The market regulator will also make further relaxations to rules governing real estate investment trusts (Reits), to help the instrument take off.
The announcements are likely at Sebi’s board meeting on Friday. The board will also approve its annual accounts for 2015-16. It will be the last board meeting of Prashant Saran, Sebi’s longest-serving whole-time member. His term ends on June 27 and the government has already set the ball rolling to find a replacement.
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On enabling foreign fund managers relocate to India, Sebi will allow them to register as ‘portfolio managers’ under the portfolio management services (PMS) regulations. Last year’s Union Budget had proposed to facilitate relocation of offshore fund managers investing in India. Currently, fund managers managing foreign money operate out of Singapore or Mauritius, thanks to their friendly tax regime. These fund managers essentially invest funds of foreign investors in the Indian markets.
Sebi might ask offshore fund managers (OFMs) or eligible fund managers (EFMs) acting on behalf of an eligible investment fund (EIF) to register under the PMS regulation. “Sebi plans to put in place a procedure for registration of an existing foreign-based fund manager desirous of relocating to India or as a fresh applicant,” said a source cited above.
Recently, the government allowed a taxation incentive under Section 9A of the Income Tax Act for offshore fund managers who are keen to relocate to India. A new section in the Act, it provides that the fund management activity carried out through an EFM located in India and acting on behalf of an EIF would not constitute a business connection in India of such a fund.
Besides, Sebi might allow a registered portfolio manager to function as EFM, subject to conditions. It is learnt the regulator had discussed the matter with several stakeholders, where various hindrances was pointed out in the existing regulations for portfolio managers.
Reits
Sebi’s board is also expected to approve changes to the Reit framework by allowing investments in under-construction projects, have a greater number of sponsors and easier approvals for related party transactions.
Reits are investment vehicles that pool investors’ money to invest in rent-yielding real estate projects like office buildings or shopping malls. Sebi had first introduced Reit regulations two years before.
However, not a single entity has launched a Reit in the domestic market, due to several impediments. Sectoral players, however, say the Reit market could be worth billions if certain issues are ironed out.
