SEBI Resolves FPI Rules Violations with Major Banks

In a significant development, HDFC Bank, HSBC, Citi Bank, and Deutsche Bank AG have reached a settlement with the Securities and Exchange Board of India (SEBI) concerning alleged violations of Foreign Portfolio Investors (FPI) rules.

The resolution follows the banks’ submission of settlement applications to SEBI, wherein they proposed resolving the matter without admitting or denying the findings. SEBI recommended settling the issue through a payment totaling Rs 39.36 lakh, an amount agreed upon by the banks.

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SEBI’s investigation, initiated following observations made as of October 5, 2021, found that certain registered FPIs did not meet the eligibility criteria for registration or renewal as per FPI norms. The investigation further revealed that the banks had facilitated registration or renewal for these ineligible FPIs, thereby violating SEBI (FPI) regulations, 2019.

Each of the banks, including Deutsche Bank AG, HSBC, HDFC Bank, and Citi Bank NA, contributed towards the settlement charges. Specifically, Deutsche Bank AG paid Rs 11.05 lakh, HSBC paid Rs 10.87 lakh, HDFC Bank remitted Rs 9.18 lakh, and Citi Bank NA paid Rs 8.25 lakh.

SEBI’s adjudicating officer, Amar Navlani, confirmed the closure of adjudication proceedings against the banks through a settlement order, in accordance with the Settlement Regulations.

The resolution underscores SEBI’s commitment to enforcing regulatory compliance within the Indian securities market and ensuring the integrity of FPI regulations. It also highlights the importance of financial institutions adhering to regulatory norms and procedures governing FPI investments.

Moving forward, stakeholders will monitor the implementation of stricter compliance measures by the banks to prevent future violations and uphold transparency and fairness in the Indian financial ecosystem.