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Avoidable suspense: on Indian-origin FPIs
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Portfolio
SEBI could have handled better the issue of Indian-origin foreign portfolio investors
Foreign investors(निवेशकों) in the Indian market are used to unexpected(अप्रत्याशित) twists(मोड़) in the regulatory landscape, but they seldom(कभी कभी/थोडा) talk tough in the public domain(इलाका/क्षेत्र). So it was unusual for a group of foreign portfolio investors (FPIs) to openly appeal to the Prime Minister for an urgent intervention(हस्तक्षेप) last Monday. The Asset(संपत्ति)Managers Roundtable of India (AMRI) warned(आगाह) that India’s booming(धूम मचाना/शोर मचाना) stock markets will be in for a tight bear-hug and the embattled(ठनी/सन्नद्ध करना) rupee could face even greater pressure if an April 10 diktat from the Securities and Exchange Board of India is not scrapped(खत्म कर दिया/फेंकना) ।. The SEBI circular, they argued(तर्क करना/उलझ जाना) , disqualifies (अयोग्य ठहराना)about $75 billion of portfolio investments into India made by FPIs backed by domestic institutions, NRIs, Persons of Indian Origin and Overseas Citizen of India card-holders. The total portfolio investments in India’s financial markets are estimated at $450 billion. The circular, issued to enhance(वृद्धि करना/सुधारना) the Know Your Client norms for FPIs, ended up imposing(प्रभावशाली/शानदार) a blanket(पूर्ण) ban(प्रतिबन्ध) on certain(निश्चित ) types of investments where NRIs, PIOs or OCIs were investors (beyond a threshold) or even served as senior managing officials of these funds. The circular delegates(प्रतिनिधियों) the task of identifying high-risk jurisdictions, with tighter KYC norms, on custodian(संरक्षक/निधिपाल) banks.
Last week, SEBI called AMRI’s warning as “preposterous(निरर्थक/बेहूदा) and highly irresponsible(गैर जिम्मेदार)”. Yet, by the weekend the H.R. Khan Committee set up by SEBI recommended changes that may be made to the regulator’s directive(आदेश/निदेशक) , addressing most of the concerns(चिंताओं) raised(उठाया/बढ़ा हुआ) by the FPIs. The panel’s report clarified that NRIs, OCI card-holders and resident Indians can manage the investments of any FPI registered with SEBI and, more importantly, hold up to 50% of an FPI’s assets under management. This has removed any ambiguity(अस्पष्टता/संदिग्धता)and provided relief to foreign investors who were left guessing(अनुमान ) how the term(अवधि) ‘majority’ — as stated in the April circular — would be determined(निर्धारित) by SEBI while applying the beneficial(फायदेमंद) ownership test. The committee said the deadline for complying(अनुपालन) with the circular, which was already extended from August 31 to December 31, must be extended(बढ़ाया हुआ/विस्तारित) further, and funds with investments breaching(उल्लंघन) the final thresholds(दहलीज) that the regulator decides upon should be granted 180 days to unwind positions. SEBI has now announced public consultations(विचार-विमर्श/मंत्रणा) before it finalises these norms, and in the process created some breathing space for such funds to remain invested on Dalal Street. No one should have a grouse(मैल/परेशानी with attempts(प्रयासों ) to curb(नियंत्रण)round-tripping of illegal domestic wealth into the Indian market through the foreign investments route. But treating all FPIs with Indian-origin(मूल के) managers as potential conduits of illicit(अवैध) money is unwise(अज्ञानी/मूर्खतापूर्ण ). SEBI could have managed all of this as an independent regulator had it held a timely dialogue with stakeholders before framing these norms, as it usually does. Such policy uncertainty and sharp(तीव्र/स्पष्ट) about-turns will do little to enhance India’s credibility(विश्वसनीयता) among global investors.
Important Vocabulary
1.Booming(धूम मचाना/शोर मचाना)
Synonyms: growing, profitable, prosperous, roaring, thriving
Antonyms: disadvantageous, failing, losing
2.Directive(आदेश/निदेशक) ,
Synonyms: decree, edict, injunction, mandate, memo
Antonyms: disorganization, lawlessness, answer
3.Domain(इलाका/क्षेत्र).
Synonyms: realm, sphere, territory, authority, bailiwick
Antonyms: sky, surrender
4.Embattled(ठनी/सन्नद्ध करना)
Synonyms: beset, crenelated, fighting, fortified, prepared
5.Preposterous(निरर्थक/बेहूदा)
Synonyms: absurd, crazy, excessive, fantastic, foolish
Antonyms: bad, balanced, believable, credible, good
6.Concerns(चिंताओं)
Synonyms: burden, interest, involvement, matter, thing
Antonyms: entertainment, fun, pastime, unemployment, disinterest
7.Extended(बढ़ाया हुआ/विस्तारित)
Synonyms: continued, drawn-out, lengthy, protracted, elongate
Antonyms: abbreviated, abridged, compressed, condensed, contracted
8.Credibility(विश्वसनीयता)
Synonyms: chance, integrity, prospect, reliability, soundness
Antonyms: unlikelihood, implausibility, improbability, unreasonableness
9.Breaching(उल्लंघन)
Synonyms: breach, contravene, disobey, encroach, impose
Antonyms: give, obey, receive, comply, discharge
10.Ambiguity(अस्पष्टता/संदिग्धता)
Synonyms: doubt, uncertainty, vagueness, anagram, doubtfulness
Antonyms: certainty, clarity, clearness, definiteness, explicitness
11.Embattled(ठनी/सन्नद्ध करना)
Synonyms: beset, crenelated, fighting, fortified, prepared
