The Securities and Exchange Board of India plans to review compliance requirements governing foreign portfolio investors and issue a consultation paper aimed at aligning domestic procedures with international standards. Addressing delegates at the Business Standard BFSI Insights Summit in Mumbai on Wednesday, October 28, 2026, SEBI Chairman Tuhin Kanta Pandey acknowledged that certain regulatory obligations in India remain more onerous than those established in other leading financial jurisdictions, prompting the market regulator to seek industry feedback while preserving safeguards needed for investor protection.
The planned regulatory review comes amid substantial capital withdrawals from Indian equity markets, with depository tracking figures recording net foreign equity outflows of ₹46,748 crore during October through October 27. Earlier media reporting citing depository data had recorded monthly equity outflows of ₹48,056 crore, noting that cumulative withdrawals during 2026 reached ₹3.08 lakh crore compared with ₹1.66 lakh crore withdrawn across 2025. Pandey explained that while domestic retail and institutional savings form the bedrock of local capital formation, overseas institutional capital remains essential to widen the financing pool and introduce specialized market expertise.
SEBI is working with the Reserve Bank of India on digital certification of documents to further streamline foreign investor onboarding, according to Business Standard.
Average monthly systematic investment plan contributions in FY27 through September stood at around ₹32,000 crore, more than four times the FY19 level, according to Business Standard.
The forthcoming consultation builds upon targeted administrative measures implemented by the regulator over recent months. Under the SWAGAT-FI framework, which took effect on June 1, 2026, for eligible institutional entities such as pension funds and sovereign wealth managers, qualifying applicants have completed market registration in as little as five days through streamlined documentation.
Complementary procedural changes include permitting digitally signed powers of attorney since August 20, 2026, eliminating consularisation requirements, alongside regulatory exemptions introduced in September for entities investing exclusively in government debt. In recent actions, SEBI also permitted foreign portfolio investors to participate in non-cash-settled non-agricultural commodity derivatives and index derivatives. Furthermore, the market regulator notified a cash-market fund netting framework scheduled for operational deployment on or before December 31, 2026, to enhance cash management efficiency for eligible overseas transactions.
Pandey highlighted the structural expansion of the domestic financial system, observing that India's market capitalisation-to-GDP ratio increased from 69% in fiscal year 2016 to approximately 130% at present. Concurrently, outstanding corporate bonds expanded to nearly Rs 61 lakh crore, representing about 55% of total bank credit extended to industrial and service sectors.
Regarding exchange governance, the chairman clarified that permitting stock exchanges to self-list on their own trading platforms is neither off the table nor actively under consideration, citing inherent conflicts of interest since exchanges function as front-line market regulators.
