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NRIs can own up to 100% of a global fund set up at GIFT City

Published on May 01, 2024
Current Context: On April 30, 2024, the Securities and Exchange Board of India (SEBI) made a significant change to the investment norms for non-resident Indians (NRIs) and Overseas Citizens of India (OCIs).
NRIs can own up to 100% of a global fund set up at GIFT City
  • They are now allowed to own up to 100% in global funds set up at the Gujarat International Finance Tec-City (GIFT City), a major shift from the previous rule where their combined holdings in a global fund were capped at less than 50%.
  • This move is expected to boost the fund ecosystem at GIFT City and attract genuine flows from overseas Indians.
  • However, there are certain conditions for this increased participation, including the submission of Permanent Account Number (PAN) cards of all their NRI/OCI individual constituents, along with their economic interest in the FPI.
  • Additionally, such FPIs will still have to adhere to the granular disclosure norms on economic interest and ultimate ownership issued by the regulator.
  • This is to ensure that the NRI route is not used to circumvent rules such as the 25% minimum public shareholding requirement.
  • SEBI has also relaxed rules on caps on passive funds’ exposures to sponsor group company stocks, increasing the threshold from 25% to 35%.

Question:

Q.1 What significant change did the Securities and Exchange Board of India (SEBI) make to the investment norms for non-resident Indians (NRIs) and Overseas Citizens of India (OCIs) on April 30, 2024?
a. They are now allowed to own up to 50% in global funds set up at the Gujarat International Finance Tec-City (GIFT City)
b. They are now allowed to own up to 100% in global funds set up at the Gujarat International Finance Tec-City (GIFT City)
c. They are now allowed to own up to 75% in global funds set up at the Gujarat International Finance Tec-City (GIFT City)
d. They are now allowed to own up to 25% in global funds set up at the Gujarat International Finance Tec-City (GIFT City)
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