Indian government to form panel for merger of NRI, FPI routes

The Indian government is planning to form a high-level panel to look into the merger of NRI investment and Foreign Portfolio Investment (FPI) routes, according to media reports.

Indian Finance Minister Nirmala Sitharaman had also announced the merging of the two investment routes in her Budget speech earlier this year. Photo courtesy: PIB

A committee formed by market regulator Securities and Exchange Board of India (SEBI) had recommended the merger in 2018. Indian Finance Minister Nirmala Sitharaman had also announced the merging of the two investment routes in her Budget speech earlier this year.

The high-level panel will comprise representatives from the Reserve Bank of India, SEBI, and the Department of Economic Affairs (DEA). However, the central bank has expressed its reservations over the merger, sources said.

It is concerned that a merger will impact deposits held by NRIs in non-resident external (NRE) accounts. FPIs are not permitted to open rupee-denominated accounts for savings and fixed deposits.

Currently, NRI accounts hold deposits worth USD 93 billion (INR 7 lakh crore), according to RBI data.

The panel will also explore ways to ease compliance burden for NRIs after the merger, since they are usually individual investors while FPIs are institutional investors.