Capital markets regulator Sebi on Thursday eased the onboarding process for foreign portfolio investors (FPIs), allowing them to submit a digitally signed Power of Attorney (PoA) to their custodians, a move aimed at making registration and operational procedures more convenient for overseas investors.
Under the revised framework, an FPI can grant a Power of Attorney to its custodian by specifying its address and executing the document through a digital signature in accordance with the provisions of the Information Technology Act, 2000, Sebi said.
A Power of Attorney is a legal document through which an FPI authorises its custodian to undertake specified activities and act on its behalf in relation to its investments and other operational requirements in India. Custodians play an important role in facilitating the investment and settlement activities of foreign portfolio investors in the Indian capital markets.
The latest change provides FPIs with an alternative to the traditional process of executing and submitting physical documents. By recognising digitally signed PoAs, Sebi has sought to simplify the onboarding process and reduce documentation-related requirements for overseas investors and their custodians.
The move is part of broader efforts to improve ease of doing business in India's securities market and streamline processes for global investors. Digital documentation can potentially reduce turnaround time associated with preparing, signing, transmitting and verifying physical paperwork, particularly when the parties involved are located in different countries.
Under the revised rule, the FPI will be required to clearly specify its address in the Power of Attorney and use a digital signature that complies with the applicable provisions of the Information Technology Act, 2000. This provides a formal legal framework for the electronic execution of the document while retaining requirements related to authentication and identification.
The change is expected to be particularly useful for FPIs that operate through international investment structures and need to coordinate documentation across multiple jurisdictions. The ability to execute the PoA digitally can make the process more efficient by allowing documents to be signed and shared electronically rather than relying solely on physical execution.
For custodians, the revised framework could also simplify the process of receiving and processing PoAs from overseas clients. Since the custodian acts on the instructions and authority provided by the FPI, the PoA is an important part of the operational relationship between the investor and the custodian.
The Sebi decision comes amid continuing efforts to improve India's capital market infrastructure and make regulatory procedures more efficient without compromising compliance requirements. FPIs are an important source of foreign capital for Indian equities and other securities, and measures that reduce procedural hurdles can contribute to smoother participation by international investors.
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The regulator's decision also reflects the increasing use of digital processes across financial markets. Electronic documentation, digital signatures and online regulatory procedures have become increasingly important as market participants seek faster and more efficient ways to complete compliance-related formalities.
The revised provision does not remove the requirement for an FPI to provide a Power of Attorney to its custodian where such authorisation is required. Instead, it changes the manner in which the document can be executed, allowing a compliant digital signature to be used.
The move is therefore expected to make FPI onboarding less cumbersome while providing custodians with a legally recognised digital document that can be processed electronically. Sebi's latest step further strengthens the digital framework governing India's securities market and could help make the country more accessible and operationally efficient for global portfolio investors.
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