FPI & OPI Compliance

A Foreign Portfolio Investor (FPI) is registered under SEBI (Foreign Portfolio Investors) Regulations 2019 with a Designated Depository Participant (DDP). Category I: sovereign wealth funds, central banks, pension funds, multilateral agencies — lowest risk, fastest registration. Category II: regulated funds, university endowments, regulated entities — moderate risk. No Category III since 2019 consolidation.

Listed equity and equity derivatives; listed corporate bonds; government securities; treasury bills; commercial paper; units of mutual funds and InvITs/REITs; and other securities specified by SEBI. FPI aggregate limit in a listed Indian company: 24% of paid-up capital (extendable to sectoral cap by shareholder resolution). An individual FPI cannot hold more than 10% of equity — above 10%, treated as FDI under the NDI Rules 2019.

Under FEMA (Overseas Investment) Rules 2022, an Indian person can make OPI — portfolio investments in listed foreign securities. OPI is permitted up to the LRS limit (USD 250,000/year per individual). OPI does not include control or 10%+ stake in a foreign entity — that requires ODI (Overseas Direct Investment). Gains from OPI are taxable as capital gains in India; Section 194LC TDS applies on interest from foreign listed bonds.

FPIs must: renew registration every 3 years with the DDP; file Form FC-TRS within 60 days of each portfolio transaction; comply with SEBI's FPI KYC annual refresh; file Schedule FA in ITR (foreign assets — FPI holdings are exempt for non-residents but required for resident FPIs); disclose beneficial ownership structure to DDP under SEBI's beneficial ownership norms. Breach of any limit triggers automatic reclassification of excess as FDI.

Section 13 FEMA 1999: up to three times the amount involved, or ₹2 lakh if the amount is not quantifiable, per violation. RBI's compounding route allows settlement of violations without prosecution. Common FPI violations: non-reporting of beneficial ownership changes, threshold breaches without timely disposal, delays in FC-TRS filing. Compounding fees are typically 1–3% of the violation amount subject to minimums.