- The Securities and Exchange Board of India (SEBI) has introduced significant amendments to the Foreign Portfolio Investors (FPI) Regulations, replacing the existing US dollar-based fee structure with a rupee-denominated payment system.
- Alongside this reform, the market regulator has revised registration fees, modified custodian payment norms, simplified compliance requirements, and introduced new intraday borrowing rules for mutual funds.
- The changes are aimed at improving operational efficiency, reducing administrative complexity, and strengthening India’s capital market infrastructure.
What Has SEBI Changed?
SEBI has notified several amendments to the FPI Regulations that will take effect after six months, allowing foreign investors and market intermediaries sufficient time to transition to the new framework.
The key changes include:
- Registration and regulatory fees will now be paid in Indian Rupees (INR) instead of US dollars.
- Revised fee structure for FPIs and Foreign Venture Capital Investors (FVCIs).
- Monthly custodian fee payment mechanism.
- Simplified FPI registration process.
- New intraday borrowing framework for mutual funds.
FPI Registration Fees Shift to INR
One of the biggest changes is the replacement of the US dollar-denominated fee structure.
Under the revised regulations:
- Earlier registration fee: US$ 2,500
- Revised registration fee: ₹2.30 lakh
Similarly:
- Application fee earlier prescribed as US$1,000 has been replaced with ₹90,000 (or equivalent eligible foreign exchange).
SEBI has also revised:
- Continuance fees
- Late payment charges
- Other regulatory fees
This shift eliminates dependence on exchange rate fluctuations and simplifies fee collection.
Why Did SEBI Introduce the Change?
According to SEBI, the earlier dollar-based fee collection system created several operational challenges:
- Manual accounting processes
- Complex invoicing
- Delayed reconciliation
- Limited real-time financial visibility
- Slower financial reporting
Moving to a rupee-based system is expected to streamline accounting, improve transparency, and reduce administrative burdens.
Custodian Fee Structure Revised
SEBI has also modified the fee payment schedule for Designated Depository Participants (DDPs), commonly known as custodians.
Earlier
- ₹10 lakh annually
New Structure
- ₹85,000 per month
Additionally, DDPs must remit registration-related fees to SEBI within five working days after granting FPI registration.
The revised framework is expected to improve cash flow management and operational efficiency.
Simplified FPI Registration Process
To make compliance easier, SEBI has updated the Common Application Form used by FPIs.
Applicants will now be required to include:
- Date of Birth (for individuals)
- Date of Incorporation (for entities)
The change aligns with the Central Board of Direct Taxes (CBDT) guidelines issued earlier this year and will facilitate quicker PAN allotment.
New Intraday Borrowing Rules for Mutual Funds
SEBI has also amended the Mutual Fund Regulations to permit intraday borrowing under specified circumstances.
Mutual funds can now borrow during the day to bridge temporary liquidity mismatches arising from:
- Pay-in and pay-out settlement timings
- Foreign exchange settlements
- Other operational settlement requirements
However, Asset Management Companies (AMCs) must repay the borrowing before the end of the same trading day. If the borrowing extends beyond the day, it must comply with SEBI’s existing overnight borrowing regulations.
Existing Borrowing Limit Continues
The new intraday borrowing facility is in addition to the existing provision that allows mutual fund schemes to borrow up to 20% of their net assets to meet redemption obligations.
This ensures liquidity support while maintaining investor protection.
Fee Collection in FY2025–26
- According to SEBI, during FY2025–26 it collected approximately US$12.98 million through Registration fees, Continuance fees and Other regulatory charges
- The amount also included GST collections.
Impact on Foreign Investors
The amendments are expected to provide several benefits:
- Simpler fee payment mechanism
- Reduced exchange rate uncertainty
- Faster regulatory processing
- Improved compliance efficiency
- Better operational transparency
Foreign investors will also have six months to adapt to the revised framework before implementation.
Conclusion
SEBI’s latest amendments represent another important step toward modernising India’s financial market regulations. By shifting FPI fees to Indian Rupees, simplifying registration procedures, revising custodian fee payments, and introducing intraday borrowing flexibility for mutual funds, the regulator aims to create a more efficient, transparent, and globally competitive capital market ecosystem.