• Home
  • Global News
  • Fund Managers Fear Foreign Outflows After SEBI’s New Rules
Fund Managers Fear Foreign Outflows After SEBI’s New Rules
Global  
Bloombergquint

Foreign funds have started winding up or reworking their structure after India’s market regulator barred non-resident Indians from controlling them, four fund managers told BloombergQuint requesting anonymity.

 

Trident Trust, Mauritius is winding up its Class A of Emerging India Focus Funds due to the restrictions, according to its email to investors—BloombergQuint has reviewed the mail. Under Class A, the majority shareholders are non-resident Indians, it said. Trident Trust didn’t respond to emailed queries.
 
The Securities and Exchange Board of India, in an April 10 circular, barred non-resident Indians, persons of Indian origin and overseas citizens of India from being “beneficial owners” or “in control” of foreign portfolio investors. A fund manager is considered to be in control if the beneficial ownership of a foreign fund can’t be defined—like in case of a diversified investor base.
 
SEBI on Aug. 21 extended the deadline to comply with the regulations by the end of 2018.
 
Nandita Agarwal Parker, president of Asset Managers Roundtable in India, said the government doesn’t realise the severity of the problem it has created for the fund management industry. “If not corrected immediately, about $75 billion worth of investments will need to be unwound in a short period, causing a stock market crash and a sharp fall in the rupee in an election year.”
 
BloombergQuint could not independently verify investments by foreign funds managed by NRI, PIO and OCI managers. SEBI, in an emailed statement, called the number “preposterous” and irresponsible.
 
An opportunities fund based out of Mauritius is also encountering delay in getting a category II— regulated broad-based funds—foreign portfolio investment licence as the fund manager is an NRI, said one of the managers quoted above. The fund already has a commitment of $50 million.
 
Because of the change in the regulations, funds have to look for a strategic partner, said the manager. While it has found one, approval of the Financial Services Commission, Mauritius, is required. Redoing documents and a change in shareholding led to a delay in getting the FPI licence, the fund manager said.
 
AMRI, with 13 resident asset managers as its members, on Aug 29. wrote to SEBI that the April 10 circular resulted in restrictions on investments and, in some cases, it has even placed a blanket ban on investment through certain foreign portfolio investors.
 
The funds don’t have any reservations on complying and disclosing beneficial ownership, said Nishith Desai of Nishith Desai Associates, a law firm that deals with foreign portfolio investors. “They are protesting the blanket ban.”
 

 
 


 
 


 
More in Global
Whale dies from ‘gastric shock’ after eating 40 kg of plastic in Phili...

In a statement on its Facebook page on Monday, museum officials said they uncovered “40 kilos of plastic bags, including 16 rice sacks, four banana plantati...

Recently posted . 0 views

Christchurch Mosque Killer Faces 'Unprecedented' Sentence

In New Zealand, being found guilty of murder usually comes with a minimum of 10 years in jail before possible parole.  

Recently posted . 0 views

Up to one-third of existing jobs will be automated in next three years...

Additionally, 36.75 percent respondent surveyed expect some kind of disruption in their industry in the next 2-3 years.

Recently posted . 5 views

AirAsia CEO Quits Facebook After Live-Streaming Of New Zealand Shootin...

In a series of tweets on Sunday, Fernandes said Facebook Inc. could have done more and that his Facebook account had 670,000 followers.

Recently posted . 4 views

Belgian pigeon gets auctioned for world record prize!

Belgium's best long-distance racer had been expected to break the previous record of USD 425,000 paid for a pigeon called Nadine.   ...

Recently posted . 2 views

New Zealand Mosque Shooter Was Part of Dark Internet Groups That Calle...

Tarrant live-streamed the massacre, shouted out a popular meme slogan and published a long, rambling manifesto replete with inside jokes geared for those steeped in...

Recently posted . 9 views

 
 
 

Prashnavali

Thought of the day

“A book is a magical thing that lets you travel to faraway places without even leaving your chair.”
Anonymous