SEBI will review compliance burden on foreign investors: Tuhin Kanta Pandey

Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey said at the Business Standard BFSI Insight Summit 2026 in Mumbai that the regulator will reassess rules that reduce India’s competitiveness for foreign investors and will soon release a consultation paper to align these norms with global practices. In a fireside chat with Business Standard’s AK Bhattacharya, he stressed that India must keep benchmarking its markets against international standards and avoid complacency. He noted that SEBI has already engaged extensively with foreign portfolio investors (FPIs) and other global participants to understand their concerns, resolving several issues around market access, settlement, and onboarding.

However, he acknowledged that some regulations still set India apart from both developed and emerging markets, and SEBI will scrutinise provisions that create avoidable compliance burdens.Pandey said India’s markets are widely respected, but SEBI will continue to evaluate whether existing procedures are truly necessary and whether participants can be given a smoother operating environment. On easing foreign investor access, he highlighted that SEBI has revised the block window framework, introduced a closing option window for cash equities, and permitted net settlement of funds for eligible FPI trades in the cash segment. According to him, the net settlement facility is expected to go live in December.

He added that onboarding has been simplified through a single application form that covers FPI registration, bank account opening, and income-tax requirements. SEBI now allows digital powers of attorney to eliminate the need for apostille certification, and is working with the Reserve Bank of India (RBI) to enable digital certification of documents.Under the SWAGAT-FI framework, some FPIs have recently been able to complete registration in as little as five days, compared with the earlier process that could stretch to several months.

Pandey pointed out that investment decisions are influenced by multiple variables such as earnings growth, post-tax returns in dollar terms, alternative investment opportunities, currency trends, oil prices, and both transaction and capital gains taxes.In his keynote address, he said India’s evolving financing requirements call for a deeper securities market that can link businesses and infrastructure projects with diverse capital sources. He noted that India’s market capitalisation-to-GDP ratio has risen from 69 per cent in FY16 to about 130 per cent, while outstanding corporate bonds have grown to nearly rs61 trillion, roughly 55 per cent of bank credit to industry and services.He highlighted that mutual funds have expanded at around 20 per cent per year over the last decade and now represent about 23 per cent of India’s GDP.

Average monthly systematic investment plan (SIP) inflows in FY27 up to September were around rs32,000 crore, more than four times the level seen in FY19.Pandey underlined that banks, bond markets, equity markets, and investment funds must function in a complementary manner. Corporate bonds can supply long-term debt, while real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) can channel investor money into income-generating assets.He said SEBI has made the initial public offering (IPO) and rights issue processes more efficient, cut listing timelines for debt securities, and exempted certain small-value private placements with a face value of rs10,000 from mandatory use of a merchant banker, subject to specified conditions.

According to Pandey, SEBI has also eased mandatory listing norms for some outstanding unlisted non-convertible debt securities when an issuer seeks to list for the first time. In the alternative investment fund (AIF) segment, the GARUDA mechanism has been introduced to shorten fund launch timelines.Other initiatives include a single filing system for listed entities, a simpler accreditation framework, the introduction of specialised investment funds (SIFs), and the Portfolio Managers’ Route for Investing in Mutual Fund Units (PRIM). He added that eligible FPIs are now allowed to trade in non-cash-settled, non-agricultural commodity derivatives and non-agricultural index derivatives.

On investor protection and the SME ecosystem, Pandey said SEBI is reviewing the small and medium enterprise (SME) listing framework. Proposals include setting eligibility based on post-issue market capitalisation and requiring larger issuers to adopt Indian Accounting Standards (Ind AS).He explained that the framework must strike a balance between lighter compliance for smaller firms and stronger governance as they scale up.

SEBI also aims to lower issuance costs and enhance liquidity, including by revisiting the market-making structure.Pandey noted that India has over 600,000 companies and suggested that at least 2,000 firms with robust corporate governance could be brought to the public markets.On monitoring IPO proceeds, he said SEBI wants third-party monitoring agencies to report directly to stock exchanges if issuers do not cooperate, thereby improving transparency on whether funds are being used as stated in offer documents.

Source: bsindia