Streamlining the onboarding process of FPIs
Summary
This circular amends the Master Circular for Foreign Portfolio Investors to streamline their onboarding process. It permits DDPs to grant registration based on scanned documents and allows digital signatures for application forms. Additionally, it introduces SWIFT-based certification of documents and updates specific timelines within the existing regulatory framework.
Text
The DDP may grant FPI registration to the applicant on the basis of scanned copies of executed Common Application Form (‘CAF’), scanned copies of certified supporting documents and applicable fees submitted by the applicant.
The DDP shall thereafter update the CAF module as per the standard process, for issuance of Permanent Account Number (‘PAN’).
Post allotment of PAN to the applicant, the scanned copies of certified Know Your Client (‘KYC’) documents of the applicant shall be uploaded on the KYC Registration Agencies (‘KRA’) by the DDP/ Custodian.
The Custodian shall ensure that appropriate systems and procedures are in place to prevent any activity in such accounts till verification of physical documents is carried out.
Only upon receipt and verification of the physical documents by the DDP/ Custodian, the Custodian shall make an application to the Clearing Corporation (‘CC’) for allotment of a CP Code to the FPI and carry out necessary steps for enabling the FPI to transact in the Indian securities markets.
FPIs may use digital signatures for the purpose of execution of CAF and other registration related documents, provided such digital signatures are in accordance with the provisions of the Information Technology Act, 2000.
In lieu of physical attestation, certification of copies of original documents by authorized bank officials (i.e. officials of Multinational Foreign Banks or any Bank regulated by RBI) through SWIFT mechanism may be accepted by DDPs/ Custodians for the purpose of verification of documents.
The authorized bank official shall be required to send copies of original documents to the DDP/Custodian digitally and certify the authenticity of these documents through authentic free format SWIFT message types (such as SWIFT MT 599) sent to the DDP/ Custodian.
In cases where PAN application by the FPI applicant is made via the CAF portal, the DDP/Custodian may verify the PAN of the FPI basis its availability on the CAF module hosted on the website of the depositories, where the PAN is reflected via an automated secure feed from the Income Tax department.
For operational convenience, it is now specified that in case an FPI applicant belongs to an existing FPI investor group, it may submit its unique FPI investor group ID in the CAF, in lieu of providing complete details of all group constituents.
The term ‘forthwith’ mentioned at paragraphs 9 (iv), 12 (iii), 14 (i) of Part A and in Annexure H of the Master Circular, shall be read as ‘as soon as possible but not later than seven working days’.
The term ‘forthwith’ mentioned at paragraphs 14 (iii), 15 (i) of Part A and paragraph 1 (vi) of Part C of the Master Circular, shall be read as ‘as soon as possible but not later than two working days’.
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Source: SecMarx — Streamlining the onboarding process of FPIs. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.