SEBI Extends Compliance Timeline for FPIs and ODIs Amid Regulatory Overhaul

The Securities and Exchange Board of India (SEBI) has officially extended the deadline for Foreign Portfolio Investors (FPIs) and Offshore Derivative Instruments (ODIs) to meet new compliance standards. This move gives investors more breathing room as they adjust to stricter disclosure rules.

Bigger Investments? Expect More Disclosure

SEBI is pushing for more transparency. It’s doubled the threshold that triggers detailed ownership reporting for FPIs, from ₹25,000 crore to ₹50,000 crore. That means if an FPI holds over ₹50,000 crore in Indian equities, it must now share complete details about every entity involved, whether they own, control, or benefit from the investment. Think of SEBI pulling back the curtain to see who's behind the money.

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Open Account Now

This isn’t just for show. It’s meant to stop investors from sidestepping takeover laws or skirting rules that ensure public companies stay, well, public.

ODIs Face Tougher Scrutiny Too

SEBI is also tightening the reins on ODIs (also known as Participatory Notes). Now, ODI holders who either invest more than ₹50,000 crore or put over 50% of their equity ODI exposure into one corporate group must meet the same deep-disclosure rules as FPIs.

And there’s more: ODIs can no longer be based on derivatives, unless those derivatives are linked to government securities. Plus, any ODI issued must be matched one-to-one with the exact security it represents. No more playing fast and loose. It’s all about keeping things transparent and traceable.

New Deadline: More Time, But Still a Clock Ticking

SEBI originally gave until December 17, 2024, for those out of compliance as of October 31, 2023, to meet the rules. Now, investors have an extra six months, to November 17, 2025, to either cut their holdings down to size or fully disclose who's involved.

If they don’t? SEBI may force redemptions or liquidate portfolios that don’t comply.

What the Industry Is Saying

As expected, reactions are mixed. Many agree that these changes are suitable for the market’s long-term health. But some worry about how much harder and costlier it will be to stay compliant.

Prakhar Dua, a financial services expert at Nishith Desai Associates, pointed out that ODI issuers now have a heavier burden. They need to collect and submit detailed information from subscribers and verify everything themselves.

Nikunj Saraf from Choice Wealth added that FPIs will probably need to rethink their strategies and move toward long-term equity investments to navigate these new rules.

Politics Enter the Picture

These changes haven’t gone unnoticed in the political arena. Congress’s Jairam Ramesh questioned SEBI’s enforcement, especially concerning past Adani Group controversies. He’s asking tough questions: Have all FPIs disclosed their ultimate beneficial owners? And what’s SEBI doing about those who haven’t?

Bottom Line

SEBI’s decision to give FPIs and ODIs more time reflects a balancing act: pushing for greater transparency while allowing market players to catch up. As India’s markets grow, so does the need for accountability. These new measures could help build investor trust and keep the system fair.