Sebi to review FPI compliance norms, issue consultation paper to align with global standards

Acknowledging that some compliance requirements in India remain more onerous than those in other major jurisdictions, Pandey said it is examining the existing norms to facilitate greater foreign investor participation in domestic markets.

"We recognise that some compliance requirements in India remain more onerous than those in other major jurisdictions. We are reviewing these requirements and will issue a consultation paper to seek views on aligning them with global standards, while preserving the safeguards needed for investor protection and market integrity," Pandey said while addressing the annual Business Standard BFSI Insights Summit here.

The move comes as India seeks to deepen its capital markets and widen the pool of domestic and international capital to meet the country's growing financing requirements.

The Securities and Exchange Board of India (Sebi) has already undertaken several measures to facilitate foreign investor participation, including streamlining market access, easing digital onboarding and simplifying procedures. It has also harmonised several compliance requirements with those in major global jurisdictions.

On allowing stock exchanges to list on their own platforms, he said the issue was neither off the table nor actively under consideration. While self-listing is permitted in several global markets, India's model has been different given the presence of multiple exchanges and the need to address potential conflicts of interest.

"Exchanges are also a regulator and if your own scrip is trading, then obviously you can't be a regulator on your own thing," he said, adding that the issue could be revisited with appropriate safeguards.

On revival of closed regional exchanges, including the Calcutta Stock Exchange, he said the regulatory framework does not rule out new exchanges, but their commercial viability would be crucial. With electronic trading enabling investors to access markets from across the country and abroad, exchanges would need to demonstrate that they could attract sufficient trading volumes to sustain operations.

"Just having an exchange is one thing, but whether you would be able to really make it feasible is another," he said.

He added that exchanges require substantial, continuous investment in technology to manage emerging risks, including those linked to artificial intelligence. Any revival proposal would therefore need a viable business plan, adequate liquidity and a clear rationale for setting up a separate exchange in an increasingly technology-driven market.

Pandey also said domestic savings would remain an important foundation for market development, and international participation could expand capital availability and bring expertise.

India's market capitalisation-to-GDP ratio has risen from 69 per cent in FY16 to around 130 per cent currently, and outstanding corporate bonds have reached nearly Rs 61 lakh crore, equivalent to about 55 per cent of bank credit to industry and services, Pandey said.

The next phase of market development would focus on expanding financing opportunities for businesses, deepening investor participation and ensuring markets remain fair, resilient and worthy of public trust, he added.