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SEBI seeks Foreign Investors’ Beneficial Owners details

New Delhi: Indian market regulator SEBI has written to various custodian banks asking for details of offshore funds and foreign portfolio investors (FPIs) beneficial owners.

This move takes place after a scathing attack on the Adani Group by U.S. short-seller Hindenburg Research, alleging improper use of offshore tax havens and stock manipulation. All the allegations were denied by the group.

However, the report led to a market rout where Adani group’s seven companies lost more than $100 billion since Jan. 24. As per the data, in January, foreign investors offloaded country’s equities worth 288.52 billion rupees ($3.51 billion).

As per the reports, Last week SEBI asked custodian banks – typically foreign banks to manage flows from FPIs and by March reach out to these investors and by the end of September share the details of their findings. 

The Securities and Exchange Board of India sought details of the ultimate beneficial owners specifically in cases where the fund manager and senior management official has been listed as the beneficial owner. 

As per the reports, where the custodial banks do not provide beneficial ownership details, in such cases the regulator would deem those foreign funds ineligible and ask them to liquidate their holdings by March 2024 in the Indian market.

“For a foreign portfolio license one of the key condition is that whenever asked investors need to share beneficial owner details, adding that currently, many funds cite fund manager or the “senior management official” as the beneficial owner, which does not give the regulator the clear picture of who the ultimate owner of the funds were”, as per the sources.

There are 11,000 foreign funds were registered with the Securities Exchange Board of India.