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SEBI Extends the FPI KYC Review Periodicity to Two Years and Eight Years

Writer: Kaustav Chowdhury
Kaustav Chowdhury
1 hour ago
5 min read

Foreign portfolio investors have been living with a know your client review that comes round every year or every three years. From December 1, 2026, the FPI KYC review periodicity becomes two years or eight years, and which of the two applies turns on the category of the investor and the risk classification of its jurisdiction.

What Was Issued

SEBI issued Circular No. HO/19/34/14(10)2026-AFD-POD3/I/24814/2026 on October 30, 2026, titled Rationalisation of Periodicity of KYC Review for FPIs. It operates from December 1, 2026.

The circular works by amendment to the Master Circular for FPIs, Designated Depository Participants and Eligible Foreign Investors dated May 30, 2024. Paragraph 4 of Part A, which deals with continuance of registration, is revised, and Table 6 under paragraph 5 of Part B, which sets the review periodicity, is substituted.

Who Moves to Eight Years

Three groups get the longest cycle in the revised table.

  • Category I from a jurisdiction that is not high risk: Eight years.

  • Category I from a high risk jurisdiction, where registered under regulation 5(a)(i): Eight years, which is the one place where a high risk jurisdiction does not shorten the cycle.

  • Category II from a jurisdiction that is not high risk, where the investor is a regulated entity: Eight years.

Who Stays on Two Years

The shorter cycle catches everyone else inside the two categories.

  • Category I from a high risk jurisdiction not registered under regulation 5(a)(i): Two years.

  • Category II from a high risk jurisdiction: Two years.

  • Category II from a jurisdiction that is not high risk, where the investor is not a regulated entity: Two years.

Two Groups Are Untouched

Investors registered only for government securities keep a review tied to the periodicity the Reserve Bank prescribes for their bank accounts. That link is preserved rather than replaced, so the circular changes nothing for them.

Investors under the SWAGAT-FI route keep their existing ten year cycle. Their review requirements are left as they were, and their continuance period stays at ten years rather than the three year block that applies to others.

Both carve-outs are worth noting for what they say about the design. Where a review cycle is already fixed by another regulator, or already long, the circular leaves it alone rather than folding it into the new table. So the revised table is not a complete statement of the position, and an investor in either group should not be classified against it.

The Continuance Process Gets Shorter

Two documents fall away at continuance. An FPI no longer has to separately intimate changes to information it furnished earlier, and no longer has to file a declaration that nothing has changed.

What survives is the fee. An FPI continuing its registration for the next three year block pays the applicable fee to its designated depository participant at least fifteen days before the existing registration expires. The fifteen days run backwards from expiry, so the date to diarise is not the expiry date.

What This Is Not

It is not a relaxation of the know your client obligation. The information an FPI has to furnish, and the duty to keep it accurate, are untouched. What has changed is how often a periodic review of that information falls due.

Nor does the removal of the no change declaration mean changes need not be reported. The declaration was a step in the continuance process, and its removal takes away a form at continuance, not the underlying position that the information on record is supposed to be correct.

What the Change Costs in Practice

For an investor on the eight year cycle the saving is real: a review that used to come round every year or every three years now spans more than two of the three year continuance blocks. The risk is that a file left alone for eight years drifts further from reality than a file reviewed every year.

The practical answer is to separate the two things the circular has now separated. The periodic review is a regulatory event on a long cycle. Keeping the record current is a continuous obligation that no longer has an annual or triennial prompt attached to it.

What to Do Before December 1

The work between now and then is classification. Each FPI has to be placed in the revised table, which means settling its category, whether its jurisdiction is high risk, whether it is a regulated entity, and for Category I from a high risk jurisdiction whether it is registered under regulation 5(a)(i).

That exercise is worth doing once and properly, because the longer cycle is only safe to rely on if the classification behind it is right. A file placed in the eight year column in error will not surface again for eight years.

Key Takeaways

  • The instrument is a circular of October 30, 2026: Circular No. HO/19/34/14(10)2026-AFD-POD3/I/24814/2026, on rationalisation of the periodicity of KYC review for FPIs.

  • It operates from December 1, 2026: Not from the date of the circular.

  • The old cycles were annual or three yearly: The revised cycles are two years or eight years.

  • Eight years is the longer cycle: Category I from a jurisdiction that is not high risk, Category I from a high risk jurisdiction registered under regulation 5(a)(i), and regulated Category II from a jurisdiction that is not high risk.

  • Two years catches the rest: Other Category I from a high risk jurisdiction, and Category II other than regulated entities from jurisdictions that are not high risk.

  • Two groups are untouched: Government securities only investors keep the periodicity tied to their bank accounts, and SWAGAT-FI investors keep ten years.

  • Two documents fall away at continuance: The intimation of changes and the no change declaration.

  • The fee timing is the surviving deadline: At least fifteen days before the existing registration expires.

Key Statutory Provisions

  • SEBI (Foreign Portfolio Investors) Regulations, 2019: The registration framework. Regulation 5(a)(i) is the entry whose use decides whether a Category I investor from a high risk jurisdiction takes the eight year cycle or the two year cycle.

  • Master Circular for FPIs, Designated Depository Participants and Eligible Foreign Investors dated May 30, 2024: Paragraph 4 of Part A, on continuance of registration, is revised, and Table 6 under paragraph 5 of Part B, on the periodicity of KYC review, is substituted.

  • Circular No. HO/19/34/14(10)2026-AFD-POD3/I/24814/2026 dated October 30, 2026: The instrument effecting the change, with effect from December 1, 2026.

Sources and References


Disclaimer: This article is for informational purposes only and does not constitute legal advice. Readers should consult a qualified legal professional for advice specific to their circumstances.

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