The Securities and Exchange Board of India is reportedly proposing to allow Indian investment vehicles for HNWs who do not reside in India to join categories II and III of its 'foreign portfolio investors,' depending on the classes of fund in which they want to invest. The regulator is thinking of allowing family trusts to qualify.

'Inward investment' is the aim here, with SEBI reportedly having asked India's federal government for permission to go ahead with the plan for that reason and change the SEBI (Foreign Portfolio Investors) Regulations 2014.

It has been at pains to reassure the public that fresh investors will have to undergo rigorous 'know your customer' checks. Foreign portfolio investors might not be complying with KYC rules very well at present, however, as the regulator recently sent out a circular asking them to do so by the end of the year.

Fresh guidelines to do with KYC controls and beneficial ownership are in the pipeline, with SEBI consulting interested parties for their comments, which must be in by noon on 17 September. Reuters reports that SEBI is thinking of allowing HNWs who do not reside in India (whom it calls non-resident Indians), overseas citizens of India and resident Indians to be allowed to hold non-controlling stakes in foreign portfolio investments. It also wants to place no restriction on their ability to manage non-investing foreign portfolio investments.

Category II and III FPIs should provide lists of their beneficial owners' SI numbers, names and addresses, dates of birth, tax residency jurisdictions, nationalities, percentage of shares/capital/profit ownership in the FPIs and tax residency numbers/social security numbers/passport numbers. They must also say whether they are acting alone or together through one or more natural persons, with their names and addresses.