The Securities and Exchange Board of India (SEBI) approved a comprehensive set of regulatory reforms in its 213th Board Meeting aimed at:
- Enhancing market efficiency
- Reducing compliance burden
- Promoting financial inclusion
- Strengthening governance and transparency
Key Reform Areas
| Area | Reform |
| Social Investment | SIF minimum investment reduced to ₹1,000 |
| Foreign Investment | Net settlement for FPIs |
| AIF Regulation | Flexibility in liquidation proceeds |
| Infrastructure | Relaxations for InvITs/REITs |
| Governance | New conflict of interest framework |
| Compliance | “Inoperative funds” tag introduced |
1. Social Impact Funds (SIFs)- Democratisation of Finance
- Minimum investment reduced from ₹2 lakh to ₹1,000
- Opens social investing to retail investors
- Linked with Zero Coupon Zero Principal (ZCZP) instruments
What are SIFs?
- A category of Alternative Investment Funds (AIFs)
- Invest in:
- Social enterprises
- Not-for-profit organisations
- Aim: Generate measurable social/environmental impact and financial return
Significance
- Boosts Social Stock Exchange ecosystem
- Enables mass participation in social development financing
2. Net Settlement for FPIs (By Dec 31, 2026)
SEBI approved net settlement of funds for Foreign Portfolio Investors (FPIs) in the cash market.
- What is Net Settlement?
- Only the net difference between buy & sell is settled
- Securities continue on gross settlement
Benefits
- Reduces: Capital requirement and Idle funds
- Improves: Liquidity and Market efficiency
- Aligns India with global best practices
3. Alternative Investment Funds (AIFs) – Exit Flexibility
- AIFs can now: Retain funds after tenure for: Litigation needs and Tax liabilities
- Removes requirement of NIL bank balance for closure
Additional Reform
- Introduction of “Inoperative Funds” tag
- For funds with no active management
- Reduces unnecessary compliance burden
- Alternative Investment Funds (AIFs) are Privately pooled funds investing in: Infrastructure, Startups, Social sectors.
4. Infrastructure Investment Trusts (InvITs/REITs)
Key relaxations introduced:
- Privately listed InvITs can invest up to 10% in greenfield projects
- Highly leveraged trusts (49–70%) allowed to: Borrow for:
- Maintenance
- Debt refinancing
Impact
- Supports infrastructure financing
- Improves viability of: Transmission, Energy, Urban infrastructure projects
5. Intermediary Governance – Fit & Proper Criteria
SEBI revised norms for intermediaries:
- Filing of FIR/chargesheet – not automatic disqualification
- Case evaluated on principles-based approach
- Mandatory opportunity of hearing
- Disqualification expanded to: Convictions in economic offences
Significance
- Balances:
- Ease of doing business
- Regulatory integrity
6. Strengthening Internal Ethics (Major Reform)
- Introduction of conflict of interest framework
- Establishment of: Office of Ethics and Compliance (OEC)
Key Provisions
- SEBI Chairman & Whole-Time Members under stricter norms
- Mandatory disclosure of: Immovable assets
- Uniform restrictions on:
- Trading
- Investments via intermediaries
Impact
- Enhances credibility of the regulator
- Ensures regulatory accountability
Policy Significance
- Financial Inclusion: ₹1,000 SIF threshold with Retail participation in impact investing
- Ease of Doing Business: “Inoperative funds” tag reduces compliance burden
- Investment Climate: FPI reforms improve capital inflow attractiveness
- Infrastructure Push: InvIT reforms enable long-term financing flexibility
- Institutional Integrity: OEC ensures transparency within SEBI itself
Foreign Portfolio Investors (FPIs)
- Foreign investors investing in: Stocks and Bonds
- Do not have management control