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Sebi eases FPI KYC rules: review period extended to two or eight years from 1 December
Sebi has extended the KYC review period for foreign portfolio investors from one or three years to two or eight years, depending on category and jurisdiction, from 1 December. Its 30 October circular also removes the no-change declaration to cut repetitive compliance.
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The Securities and Exchange Board of India has eased the know-your-customer norms for foreign portfolio investors, extending the interval between KYC reviews to two years or eight years, depending on the investor's category and jurisdiction. The circular was issued on 30 October, and the revised framework takes effect on 1 December 2026. Sebi says the aim is to reduce repetitive compliance and make it easier for foreign investors to do business in India.
What has changed
Until now the KYC review for a foreign portfolio investor, or FPI, was due every year or every three years, depending on its category, jurisdiction and regulatory status. The new framework raises the one-year interval to two years and the three-year interval to eight years for specified categories.
Who gets which period
| Jurisdiction | Investor | Review period |
|---|---|---|
| Not high-risk | All Category I FPIs | 8 years |
| Not high-risk | Category II FPIs that are regulated entities | 8 years |
| Not high-risk | Other Category II FPIs | 2 years |
| High-risk | Category I FPIs registered under Regulation 5(a)(i) | 8 years |
| High-risk | Other Category I FPIs | 2 years |
| High-risk | Category II FPIs | 2 years |
Regulation 5(a)(i) covers government and government-related entities. Foreign portfolio investors that invest only in government securities will continue to be reviewed on the schedule that applies to their bank accounts, as set by the Reserve Bank of India. The review period for SWAGAT-FI investors stays at 10 years, along with their 10-year continuation period.
- FPIs no longer need to report separately any changes to information they have already submitted.
- FPIs no longer need to file a no-change declaration when they continue their registration.
- For the next three-year continuation block, an FPI only has to pay the applicable fees to its Designated Depository Participant.
- Continuation fees must be paid at least 15 days before the existing registration expires.
- Depositories, custodians and Designated Depository Participants must update their systems and processes and tell the affected investors.
Sebi says that the changes are meant to reduce repetitive compliance requirements and make it easier for foreign investors to do business in India. One report describes the goal as lowering the compliance burden without changing the existing requirements for certain categories of investors. The reports found do not say how many FPIs the change affects.
For many large and regulated foreign investors in jurisdictions that are not rated high-risk, the interval between reviews will lengthen from one or three years to eight, which reduces the paperwork that custodians and the investors must repeat. Investors in high-risk jurisdictions still face a two-year cycle, with only the government-related Category I investors getting the eight-year interval.
The change does not alter the initial registration requirements, and the reports found do not suggest any change to the rules on who can register as a foreign portfolio investor.
The new norms come into effect on 1 December. Custodians and depository participants have until then to adjust their systems, and investors whose reviews were due before that date will want to check which schedule applies to them under the new categories.
The reports found on the circular do not mention any approval of public offers, and this article does not cover any.
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