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FPI (Foreign Portfolio Investor) is a resident in a country other than India, whose securities market regulator is a signatory to IOSCO's MMOU (Appendix A Signatories) or a signatory to a bilateral MOU with SEBI. In case of a Bank, it should be resident of a country whose central bank is a member of the Bank for International Settlements (BIS).

1) Unified market access route for all portfolio investments in India.

2) Proposal by SEBI committee – convergence of all portfolio investment routes, including FII, Sub Account and QFI.

3) Simplified entry norms - no registration requirement with SEBI.

Stable Government at Centre , World's fastest growing Economy , Big Focus of Government on Development , Low manufacturing cost , Higher and Reliable Quality Products , Leading FDI and FPI Destination , Large Working & Skilled Workforce , Strong Growth Trends , Peaceful Environment , Good Infrastructure and Very good Demand.

Investor is from a Country which is a member of IOSCO, have bilateral MOU with SEBI, whose central bank is a member of BIS, is listed in public statement issued by FATF and list of FATF member country.

 The investor is regulated and supervised in its home regulations by the market or banking regulator.

 Has sufficient experience, good track record, is professionally competent, financially sound, generally good reputation of fairness and integrity.

 The investor is fit and proper and legally allowed to invest in overseas jurisdictions.

 Investor is not a Non Resident Indian/ OCI or a Resident Indian. If the entity is non-individual :-

(a) the contribution of a single NRI or OCI or RI shall be below twenty-five percent of the total contribution in the corpus of the applicant.

(b) the aggregate contribution of NRIs, OCIs, and RIs shall be below fifty percent of the total contribution in the total corpus.

(c) the NRIs, OCI or RI should not be in the control of the applicant.

As per the circular by SEBI dates 5th November 2019, the classifications of FPIs have changed. Now there are only two categories Cat 1 and Cat 2, classified as under.

Category I

a) Government and Government related investors such as central banks, sovereign wealth funds, international or multilateral organizations or agencies, including entities controlled, or at least 75%, directly or indirectly, owned by such Government and Government related investor(s);

(b) Pension funds and university funds;

(c) Appropriately regulated entities such as insurance or reinsurance entities, banks, asset management companies, investment managers (‘IMs’), investment advisors, portfolio managers, broker dealers and swap dealers;

(d) Entities from the Financial Action Task Force (‘FATF’) member countries which are:

Appropriately regulated funds;

Unregulated funds whose IM is appropriately regulated and registered as a Cat I FPI -Provided that the IM undertakes the responsibility of all the acts of commission or omission of such unregulated fund;

University related endowments of such universities that have been in existence for more than five years;

(e)An entity:

Whose IM is from FATF member country and such an IM is registered as Cat I FPI; or

Which is at least 75% owned, directly or indirectly by another entity, eligible under sub-clause (ii), (iii) and (iv) above, and such an eligible entity is from a FATF member country.

Category II

Include all the investors not eligible under Category-I Foreign Portfolio Investor such as

a) Appropriately regulated funds not eligible as Category-I foreign portfolio investor;

b) Endowments and foundations;

c) Charitable organisations;

d) Corporate bodies;

e) Family offices;

f) Individuals;

g) Appropriately regulated entities investing on behalf of their client, as per conditions specified by the Board from time to time;

h) Unregulated funds in the form of limited partnership and trusts.

i) Others

Another major development in the recent circular is that a client can now trade as Omnibus account; this is major step towards making the market more accessible for the Foreign Clients.

Appropriately regulated entities such as banks and merchant banks, asset management companies, investment managers, investment advisors, portfolio managers, insurance & reinsurance entities, broker dealers and swap dealers will be permitted to undertake investments on behalf of their clients as Category II FPIs in addition to undertaking proprietary investment by taking separate registrations as Category I FPI.

a) Where such entities are undertaking investments on behalf of their clients, Category II FPI registration shall be granted subject to following conditions: Clients of FPI can only be individuals and family offices.

b) Clients of FPI should also be eligible for registration as FPI and should not be dealing on behalf of third party.

c) If the FPI is from a Financial Action Task Force member country, then the KYC including identification & verification of beneficial owner of the clients of such FPI should be done by the FPI as per requirements of the home jurisdiction of the FPI. FPIs from non-Financial Action Task Force member countries should perform KYC of their clients including identification & verification of beneficial owner as per Indian KYC requirements.

d) FPI has to provide complete investor details of its clients (if any) on quarterly basis (end of calendar quarter) by end of the following month to DDP.

e) Investments made by each such client, either directly as FPI and/or through its investor group shall be clubbed with the investments made by such clients (holding more than 50% in the FPI) through the above referenced appropriately regulated FPIs.