Synopsis: SEBI eased FPI onboarding by simplifying PAN rules, tightened market surveillance to curb insider trading and manipulation, and expanded borrowing flexibility for highly leveraged InvITs to support infrastructure development and liquidity management.
SEBI has recently introduced a set of regulatory updates aimed at improving market efficiency, strengthening investor protection, and supporting infrastructure financing. These changes span foreign investment processes, market surveillance systems, and borrowing norms for infrastructure investment trusts.
These reforms are useful because they make it easier for global investors to participate in Indian markets, reduce the chances of fraud and manipulation, and provide greater financial flexibility to infrastructure projects. Overall, they help improve transparency, liquidity, and long-term market stability.
SEBI simplifies PAN allotment process for foreign portfolio investors
The Securities and Exchange Board of India (SEBI) has eased the onboarding process for foreign portfolio investors (FPIs) by simplifying their Permanent Account Number (PAN) allotment requirements. This decision comes as a relief after market participants raised operational concerns over revised PAN application forms introduced by the Income-tax Department in March. To resolve these compliance hurdles, SEBI actively collaborated with the Central Board of Direct Taxes (CBDT) to roll out essential relaxations.
Under the updated framework, several procedural bottlenecks have been removed to ensure a smoother registration process. Notably, an authorized signatory named in the Common Application Form (CAF) can now be treated as the authorized representative for PAN purposes without needing to provide separate supporting documents. Furthermore, the legal liability of this signatory is strictly limited to the PAN application process itself, addressing a major compliance anxiety for overseas investors.
The new rules also introduce flexible alternatives for data fields that previously caused friction. In cases where an authorized signatory’s PAN, Aadhaar, or passport details are missing, FPIs can simply use their FPI registration number. Additionally, landline numbers can replace missing mobile numbers, FPIs can use their own contact details if the signatory’s information is unavailable, and investors from jurisdictions without a Taxpayer Identification Number (TIN) can use a standard placeholder value of “0000000000”.
SEBI strengthens surveillance on insider trading and suspicious market activity
The SEBI Master Circular on Surveillance of Securities Market (2026) consolidates all active market surveillance instructions into a single reference document to ensure market integrity. Released by SEBI’s Integrated Surveillance Department (ISD), it regulates stock exchanges, intermediaries, and listed companies. Notably, the updated framework extends Graded Surveillance Measure (GSM) and Enhanced Surveillance Measure (ESM) coverage to Public Sector Undertaking (PSU) companies, which were previously excluded.
The circular outlines multi-layered monitoring, including frameworks like Periodic Call Auction Sessions (PCAS) for illiquid stocks, GSM for fundamentally weak companies, and ESM for micro-caps experiencing abnormal volatility. It also mandates strict checks on trading members regarding Order-to-Trade Ratios (OTR), spoofing, and algorithmic trading safeguards.
From a compliance standpoint, the circular introduces heightened accountability. Under the updated Insider Trading (PIT) Regulations, a company’s Compliance Officer can be held personally liable for a breach of duty if insider trading disclosures are delayed or inaccurate. Additionally, intermediaries are strictly obligated to monitor and suppress unauthenticated market rumors shared via social media and messaging platforms.
SEBI broadens borrowing usage norms for highly leveraged InvITs
The Securities and Exchange Board of India (SEBI) has significantly expanded the borrowing flexibility for highly leveraged Infrastructure Investment Trusts (InvITs), specifically those whose net debt exceeds 49% of their asset value. This strategic move, effective immediately is aimed at providing greater operational liquidity and easing funding requirements for infrastructure funds, allowing them to manage their capital structures more efficiently.
Under the revised circular, these highly leveraged InvITs are now permitted to utilize fresh borrowings for crucial capital expenditure intended to enhance asset performance or drive capacity augmentation. Additionally, it has extended this allowance to cover major, non-routine maintenance expenses required under concession agreements, particularly for road projects.
Furthermore, the regulator has introduced conditional debt refinancing rules for InvITs, their special purpose vehicles (SPVs), or holding companies. While the principal amount of original debt used for permitted regulations can be actively refinanced, the framework strictly excludes accrued interest, fees, and other associated charges from being eligible for refinancing.
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