Do you think the stringent disclosure norms are going to act as an entry barrier for future FII-FPI participation?
Sandeep Parekh: I do not think correlation is the cause of the market fall. This is like very old news. This came in June, it was supposed to be implemented from November 2023 and there is a 180-day period given to comply. So, yesterday’s fall has absolutely nothing to do with this old circular. It has to do more to do with transparency.

It is not restricting investments. This is just saying that if you are kind of investing large sums in a single group of companies, you come out and tell us who you are, who was the human, the flesh and blood behind the investment. So these are not kind of very painful to implement. And, there is sufficient flexibility built into the circular and that really impacts very few, maybe single-digit or small double-digit number of FPIs.

So it seems like more of an inconvenience for a handful of people rather than something which should result in a sell-off in the markets. And as I said, this correlation is not causation. Yesterday’s fall had absolutely nothing to do with this old circular.

In terms of the time period that has been given six months to lower the holdings, is this sufficient?
Sandeep Parekh: I think it is more than sufficient. Like I said, it is a bit of an inconvenience for a very, very small number of FPIs. I think all the kind of discussions which happened at the time this came on was very clear. They want to minimize both type-1 and type-2 errors. They do not want to trouble people. And there are exemptions for widely held companies, for instance, funds which are registered, et cetera. so several exemptions are provided. So it is not likely to impact more than a handful of people. Like I said, it is an issue of transparency. It is not restricting investments at all. So I really do not see a very big issue. And if there is a genuine case, there are provisions and the regulations where SEBI can say, okay, this is a kosher investment and we are kind of not insisting on the letter of the law.

You do not think this could act as an entry barrier to new participants entering the market, do you?
Sandeep Parekh: Not at all. I think it is a transparency norm, which is supposed to impact just single digit or small double digit number of FPIs out of thousands of registered foreign investors. And it is not an absurd requirement. Just because we are an attractive market, does not mean we impose absurd laws. This is not an absurd law at all.