Whalesbook
The Securities and Exchange Board of India (SEBI) is working to reduce foreign portfolio investor (FPI) onboarding time to just five days. By digitizing workflows and improving coordination with the RBI and tax authorities, the regulator aims to attract more foreign capital. This comes as FPI assets under custody in India declined to ₹74.77 trillion by May 2026. For investors, this move could help boost ease of doing business and support market liquidity.
What Happened
The Securities and Exchange Board of India (SEBI) is actively working to shorten the time it takes for foreign portfolio investors (FPIs) to register and begin trading in the Indian market. The regulator aims to bring this onboarding process down to five days, a significant improvement from the current timeline, which can stretch to nearly a month. To achieve this, SEBI is pushing for full digitization of the registration process. This includes an increased use of Indian digital signatures and closer collaboration with the Reserve Bank of India (RBI) and the Income Tax Department to synchronize approvals.
Why Speed Matters for Markets
Foreign Portfolio Investors (FPIs) play a crucial role in Indian market liquidity. When global investors find it difficult or slow to set up their accounts, it can deter them from participating in the market. By reducing bureaucratic delays, SEBI aims to make it easier for international capital to flow into India. Recent data highlights the urgency of such reforms. According to NSDL data, FPI assets under custody in India stood at ₹74.77 trillion by May 2026, down from ₹81.39 trillion at the end of December 2025. While market fluctuations and global economic factors are significant drivers of this change, a smoother onboarding experience is a step aimed at improving the overall investment environment.
Understanding the Process Shift
The registration of an FPI involves multiple steps, including obtaining a PAN, opening bank accounts, and completing KYC formalities. In the past, this meant a heavy reliance on physical paperwork and manual coordination between various agencies. SEBI is now focusing on a common application form (CAF) to unify these requirements. By encouraging custodians to fully adopt digital documentation, the regulator hopes to remove the need for embassy attestations and reduce the time spent on physical verification. Recent developments, such as the operationalization of a unified digital workflow and the introduction of the SWAGAT-FI framework, are key components of this strategy to speed up the process.
Real-World Execution
The shift toward a digital-first approach is already being tested by market participants. Kotak Mahindra Bank, for instance, recently showcased how FPI licensing can be completed entirely through electronic signatures. Their model involves parallel verification, which significantly cuts down the time usually lost in sequential processes. By having multiple parties work on different parts of the application simultaneously, the bank demonstrated that it is possible to bypass traditional logistical challenges that often plague global offshore funds with multiple signatories.
What Investors Should Track Next
For investors, the success of this initiative will be measured by the actual reduction in registration times and the subsequent impact on foreign capital flows. While technical and process-related changes are underway, the market will monitor whether these efforts effectively encourage more consistent FPI participation. Key monitorables include the adoption rate of the new digital workflow by other custodians, the speed at which the Income Tax Department and RBI integrate with the new system, and any commentary from the regulator on further easing entry barriers. The goal is a more seamless environment that allows global investors to enter the Indian market with greater ease.