SEBI has lengthened the know-your-customer review cycle for foreign portfolio investors, replacing the earlier annual or three-year cadence with a risk-based framework that generally requires reviews every two or eight years.
The change takes effect on 1 December 2026. It is intended to lower recurring compliance work for foreign investors and designated depository participants without applying the same interval to every investor profile.
For FPIs from non-high-risk jurisdictions, Category I investors and regulated Category II entities move to an eight-year KYC review. Other Category II investors will be reviewed every two years.
For high-risk jurisdictions, Category I FPIs registered under Regulation 5(a)(i) receive the eight-year interval, while other Category I and all Category II FPIs remain on a two-year cycle.
Registration continuance becomes simpler
SEBI is also removing the requirement for most FPIs to submit an information-change intimation or a no-change declaration when continuing their registration. Investors that want to continue for the next three-year block must pay their designated depository participant at least 15 days before the current validity period expires.
The separate rules for FPIs investing only in government securities remain linked to the RBI-prescribed KYC cycle for their bank accounts. SWAGAT-FI investors retain a ten-year review period and ten-year registration block.
Market impact
The reform does not remove ongoing obligations to maintain accurate investor information. It changes the frequency of the formal periodic review and eliminates a duplicative declaration at registration continuation.
For global funds, the practical benefit is lower repetition across custody and registration processes. For DDPs, custodians and depositories, the near-term task is systems implementation before the 1 December effective date.
Boardroom read
The most material shift is from a broad annual-or-triennial rule to differentiated two- and eight-year cycles. That should reduce friction for established, regulated investors while keeping shorter review periods for higher-risk or less-regulated profiles.
Source: SEBI’s 30 October 2026 FPI circular listing.
This article is general information, not legal or investment advice.
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