Image credit : business-standard.com
Market regulator Securities and Exchange Board of India (SEBI) is keeping a track on funds based in Mauritius and the Cayman Island. These are the funds that do not hold an adequate information of the ultimate beneficial owners.
Business Standard reported that such funds are alarming as it can have a high non-resident Indian (NRI) holding. It further stated that these funds can be utilized by Indian promoters for round-tripping and manipulating share prices.
As per Business Standard report, an NRI is not permitted to posses a more than 25 per cent of any foreign fund asset under management (AUM). Collectively, NRI’s cannot own more than 50 per cent of the AUM.
A custodian informed to the publication, “All the small to mid-sized funds from Mauritius and the Cayman islands which may be run by Indians sitting overseas will be under watch.” It further stated that SEBI has been sending queries about FPI’s with high holding in few Indian group companies.
This phenomenon is followed when reports surfaced about accounts of three Mauritius-based foreign portfolio investors (FPI’s), which have sizeable investment in Adani group companies were frozen by the National Securities Depository Limited (NSDL). As per reports, the accounts were most probably frozen on the grounds of insufficient information about the beneficial ownership. The above reports have led to a sharp drop in shares of the listed entities of ports-to-energy conglomerate.
Later, the NSDL confirmed that the accounts of the three FPI’s namely, APMS Investment fund, Albula Investment Fund and Cresta Fund have not been frozen.
The officials further informed to Moneycontrol that the NSDL website will display the accounts of the three foreign portfolio investors (FPIs) are frozen. They further revealed that punitive action pertains to the older cases.