SEBI Raises Disclosure Threshold for FPIs to ₹50,000 Crore

The Securities and Exchange Board of India (SEBI) has approved a key change in its regulatory framework for foreign portfolio investors (FPIs), raising the disclosure threshold from ₹25,000 crore to ₹50,000 crore.

The decision, announced on Monday, March 24, 2025, aims to enhance market transparency and ensure better compliance with the Prevention of Money Laundering Act (PMLA) and other related regulations.

Surge in Market Activity Prompted Revision

The revision comes in response to a sharp increase in cash equity market trading volumes between FY22-23 and FY24-25, which have more than doubled.

Given this surge, SEBI has opted to adjust the disclosure norms to align with evolving market dynamics while maintaining a strong regulatory framework for foreign investments.

New Disclosure Requirements for Large FPIs

Under the revised rules, FPIs with equity assets under management (AUM) exceeding ₹50,000 crore in Indian markets will be required to provide additional disclosures, as outlined in the SEBI circular dated August 24, 2023.

This threshold adjustment seeks to balance the need for investor scrutiny with facilitating foreign investments in Indian equities.

Focus on Preventing Circumvention of Press Note 3 (2020)

The original threshold of ₹25,000 crore was introduced as a safeguard against potential circumvention of Press Note 3 (2020), a government directive that tightened scrutiny on foreign investments from countries sharing a land border with India.

By increasing the disclosure threshold, SEBI aims to refine its regulatory approach while ensuring critical investments remain under due diligence.

Single Corporate Group Disclosures Remain Unchanged

Despite the increase in the threshold, SEBI has retained the requirement for additional disclosures if more than 50% of an FPI’s equity AUM is concentrated in a single corporate group.

This measure ensures that large investments in particular business houses remain transparent and do not create systemic risks in the financial markets.

Exemptions for Sovereign and Public Funds

In response to queries about the regulatory change, Tuhin Kanta Pandey, Secretary of the Department of Investment and Public Asset Management, clarified that sovereign and public funds are exempt from these additional disclosure requirements.

“Many of the funds (public, sovereign funds) were exempt from these additional disclosures. There are already disclosures as per PMLA and KYC for every FPI. We were only asking for more granular disclosures,” the SEBI chief stated.

Conclusion

SEBI has raised the disclosure threshold for foreign portfolio investors (FPIs) from ₹25,000 crore to ₹50,000 crore to enhance transparency and compliance with PMLA. The change follows a surge in market activity.

While disclosures for FPIs investing heavily in single corporate groups remain, sovereign and public funds are exempt. The revision aims to refine regulatory oversight.

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