INSUBCONTINENT EXCLUSIVE:
Senior Sebi officials assured this at a meeting with a delegation led by the CEO of the Financial Services Commission (FSC) of Mauritius,
met custodians (of foreign funds) to understand the basis on which they had identified Mauritius as a high-risk jurisdiction, officials of
close scrutiny while non-resident Indians (NRIs) and persons of Indian origin (PIOs) will find it difficult to participate in offshore funds
and was cordial, constructive and fruitful
lasted for more than an hour
Sebi told the Mauritian team that there has been wide differences in classifying high-risk jurisdictions between custodians and those needed
However, custodian officials and advisors ET spoke to said that in successive meetings Sebi officials had specially instructed them to
prepare a list which the custodian banks were never comfortable with.
Indeed, Sebi officials had even hinted that it was an advice from the
government.
Meanwhile, differences have cropped up among custodians whether Mauritius and jurisdictions like China, UAE and Cayman Islands
should be part of the list
After the US, Mauritius accounts for the highest level (about 16%) of total foreign portfolio inflows
Bermuda, British Virgin Islands, Cayman, Channel Islands, Cook Islands, Guernsey, Indonesia, Isle of Man, Jersey, Kuwait, Liechtenstein,
Malaysia, Oman, the Philippines, Russia, Saudi Arabia, Thailand, Trinidad and Tobago, and Turkey
Hong Kong, Switzerland, and Luxembourg have been dropped from the list.
A senior banker had told ET that Sebi will now finalise the names on
the basis of the list from custodians.
The classification assumes importance following a Sebi regulation in April that NRIs and PIOs cannot
The entry barrier is stiffer as the threshold (for establishing NRI control or dominance in the fund pool) would be at a lower (and
therefore more stringent) level of 10% if the FPI is based in a high-risk jurisdiction.
The BO rule would also be triggered if the fund
manager is an NRI though not an investor
Thus, NRIs and OCI (Overseas Citizen of India) card holders will not be able to own more than 10% of such FPIs coming from high-risk
jurisdictions while details of any investor who owns more than 10% in the FPI will have to be provided to the custodian.
