The Securities and Exchange Board of India (SEBI) amended the SEBI (Foreign Portfolio Investors) Regulations, 2014 by way of an amendment notification dated 27 February 2017 (Amendment Notification).
The Amendment Notification now defines ‘offshore derivative instrument’ as any instrument, by whatever name called, which is issued overseas by a foreign portfolio investor (FPI) against securities held by it that are listed or proposed to be listed on any recognised stock exchange in India, or unlisted debt securities or securitised debt instruments, as its underlying.
The SEBI Amendment Notification comes in the backdrop of a similar notification by the Reserve Bank of India (RBI) on 27 December 2016. By way of the aforesaid notification, the RBI had permitted FPIs to transact in instruments of non-convertible debentures/ bonds, either directly or in any manner as per the prevalent/ approved market practice.
The Amendment Notification expands the list of securities in which investments are permitted to be made by FPIs. Accordingly, FPIs are now, inter-alia, also permitted to invest in (a) unlisted non-convertible debentures/ bonds issued by an Indian company subject to such guidelines as may be issued by the Ministry of Corporate Affairs of the Government of India; and (b) securitised debt instruments, which would include any certificate or instrument issued by a special purpose vehicle set up for securitisation of assets with banks, financial institutions or non-banking financial institutions as originators, and any certificate or instrument issued and listed in terms of the SEBI (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008.
The full text of the Amendment Notification may be accessed at the following link: