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SC directs Mahua Moitra to approach SEBI: The Supreme Court has instructed MP Mahua Moitra to petition SEBI regarding transparency issues within Foreign Portfolio Investors (FPIs) and Alternative Investment Funds (AIFs).
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Transparency Concerns: The petition highlights concerns that opaque structures of AIFs and FPIs could lead to market manipulation, money laundering, and tax evasion, unlike the transparency norms for mutual funds.
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Rapid Growth of AIFs: The petition notes the significant growth of AIFs registered with SEBI, increasing 30-fold from 42 in March 2013 to over 1,528 in March 2025.
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AUM Surge: Assets Under Management (AUM) of AIFs have increased dramatically, from ₹1,437 crore in March 2013 to nearly ₹13 lakh crore in December 2024.
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Large FPI Holdings: The current Assets Under Custody (AUC) of registered FPIs in India was over ₹74 lakh crore as of January 2025.
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FPI Definition: Foreign Portfolio Investment (FPI) involves foreign entities investing in financial assets (stocks, bonds) without controlling the business.
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FPI Characteristics: FPI is a passive, short-term investment sensitive to market sentiments and enhances market liquidity.
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FPI Regulation in India: SEBI regulates FPIs, and a foreign investor holding over 10% of an Indian company’s capital is classified as FDI.
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AIFs Overview: Alternative Investment Funds (AIFs) are privately pooled investment vehicles for specialized investments, regulated by SEBI.
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AIF Categories: AIFs are categorized into Category I (priority sectors), Category II (diversified strategies), and Category III (high-risk investments).
