Quick edit: Lift the veil

The Securities and Exchange Board of India (Sebi) on Wednesday released a consultation paper that proposes to raise disclosure requirements for foreign portfolio investors (FPIs) with equity holding of ₹25,000 crore in India. These would include “granular data of all entities with any ownership, economic interest or control rights on a full look-through basis”. FPIs may be further categorized as high, moderate and low risk, and more disclosures are to be sought. This is a much-needed step as it will bring transparency by revealing the true ownership interest behind investments to ensure compliance with Sebi’s minimum public shareholding rules. Issues around them came into the spotlight in the Adani Group case, in which Sebi had suspected foreign funds invested in the group of having links with the promoters. A court-appointed panel did not find evidence of it, but others may yet be misusing the route. Once disclosure requirements rise, such concealment would get harder and prevent the possibility of share manipulation. They may add to the compliance burden. But if it helps give our capital markets a cleaner bill of health, it might be a pill worth the pain.