India’s market regulator has written to foreign portfolio investors and custodian banks to share details about the beneficial owners of offshore funds, sources say.
The regulator, known as the Securities and Exchange Board of India or SEBI, has acted following a market rout which has slashed the share value of India’s Adani Group over the past two weeks.
SEBI has asked custodian banks to reach out to foreign portfolio investors by March and share the details by end of September, two sources said, speaking on condition of anonymity as the matter is confidential.
If banks or funds do not provide such details, the regulator would deem the foreign funds ineligible and ask them to liquidate their holdings in the Indian market by March 2024.
11,000 foreign funds
There are 11,000 foreign funds registered with the Securities and Exchange Board of India.
An email sent to SEBI was not immediately answered.
The move by SEBI follows a dramatic market crash which wiped more than $100 billion off stock values of Adani Group‘s seven listed companies over the past two weeks.
The dramatic market crash was spurred by a scathing research report by the Hindenburg Group, which was highly critical of Adani’s use of “opaque” foreign tax havens and “precarious” debt levels.
The drama has raised questions about possible shortcomings in SEBI’s oversight of Indian markets.
- Reuters with additional editing by Jim Pollard