SEBI has announced a transition to rupee-denominated fee payments for Foreign Portfolio Investors and Foreign Venture Capital Investors. Additionally, the regulator now permits mutual funds to access intraday borrowing to better manage settlement timings. These changes, effective in six months, aim to simplify compliance and improve operational efficiency across the Indian financial sector.
The Securities and Exchange Board of India (SEBI) has introduced a regulatory overhaul aimed at streamlining operations for foreign investors and mutual fund houses. In a significant move, the regulator is shifting the fee structure for Foreign Portfolio Investors (FPIs) and Foreign Venture Capital Investors (FVCIs) from US dollars to Indian Rupees. This change, which comes into effect in six months, is designed to reduce the complexities of manual invoicing and improve the visibility of fee collection processes.
New Fee Structure and Compliance
Under the updated framework, the standard fee previously set at $1,000 has been revised to ₹90,000. Similarly, registration charges for Category-I FPIs and FVCIs will move from $2,500 to ₹2.3 lakh. Designated depository participants, who handle the registration process, must now remit these payments to SEBI within five business days of approval. By shifting to local currency, the regulator aims to resolve delays in financial reporting that previously stemmed from currency conversions and manual processing. In the 2025-26 financial year, SEBI collected approximately $12.98 million in such fees, including taxes.
Impact on Custodians and Mutual Funds
For custodians operating in India, the shift also includes a change in payment frequency. Annual custodian fees of ₹10 lakh are being replaced by a monthly payment structure of ₹85,000, which will require adjustments in cash flow management for these institutions.
Separately, SEBI has amended Mutual Fund Regulations to permit intraday borrowing. This facility is intended to help mutual funds bridge temporary gaps between pay-in and pay-out settlement timings, which can occur during forex settlements or when dealing with different asset classes. While mutual funds already had the capacity to borrow up to 20% of a scheme's net assets for redemption purposes, this new intraday provision provides additional operational flexibility. Asset management companies must ensure that any intraday credit is repaid by the close of the trading day. If a fund is unable to repay the intraday credit within this window, the amount will be treated as part of the existing borrowing limits for overnight obligations, ensuring that funds remain compliant with established prudential norms.
These adjustments, combined with the integration of incorporation and birth date details into the common application form, are part of a broader effort by SEBI to align Indian market operations with international standards while reducing administrative hurdles for foreign and domestic participants. The next phase for market participants will involve updating their internal payment systems and operational workflows to comply with the new rupee-based fee mandates before the six-month deadline expires.