SEBI announced changes on 12 September that will eliminate redundant paperwork for low-risk foreign investors such as sovereign wealth funds, central banks, and retail funds, and loosen minimum dilution requirements for IPO-bound businesses. The easing coincides with an increase in international outflows, which are being fuelled by high US tariffs, poor profitability, and high valuations. In 2025, foreign investors withdrew $11.7 billion from Indian debt and stocks.
By requiring two executive directors and separating the tasks of regulatory compliance (risk, investor complaints) and vital operations (trading, clearing, settlement), it also strengthened stock exchange governance. The minimum public offer for issuers with a market capitalisation of INR 1–5 lakh crore has been increased from INR 5,000 crore and 5% to INR 6,250 crore and at least 2.8% of the post-issue market capitalisation.
The 25% minimum public shareholding requirement will now be met by companies listing with less than 15% public float in 10 years, compared to 5 years for those launching with 15% or more. Once the government notifies them, the lenient deadlines will also apply to businesses that have not yet complied with the current regulations.
New Rules for Anchor Investors and Public Float
The regulations governing anchor investors have been relaxed. With life insurance and pension funds holding a portion of the reserved pool, the overall quota has increased from one-third to 40%. A third will be set aside for mutual funds, and any money that isn’t subscribed to by insurers or pension funds would go back to them.
With a minimum allotment size of INR 5 crore, the number of acceptable anchor investors has also increased. In order to increase India’s appeal to foreign investors, SEBI approved the Swagat-FI framework, which grants single-window access to “trusted” foreign portfolio and venture investors, including sovereign funds, central banks, and regulated retail funds, with a 10-year registration and KYC cycle instead of a 3-year one.
Additionally, they will not be subject to the 50% aggregate contribution cap that applies to resident Indians, OCIs, and NRIs. In addition, the India Market Access portal was introduced by SEBI and market infrastructure organisations to offer comprehensive instructions on FPI registration, documentation, and compliance.
To promote inflows from smaller cities and female investors, the regulator changed distributor incentives and lowered the maximum exit load in the mutual fund industry from 5% to 3%.
SEBI’s Push to Boost Mutual Fund Participation
With the introduction of a scale-based method for shareholder approval, SEBI has streamlined the rules governing related-party transactions. In addition to increased commissions for onboarding new female investors, distributors can receive up to 1% of the initial application value, or INR 2,000, for new investors from cities outside of the top 30.
Low-value transactions do not need to be disclosed, while high-value acquisitions now need a vote. Transactions above 10% of turnover require clearance for businesses with a turnover of INR 20,000 crore. From INR 1,000 crore to INR 5,000 crore, the bar for companies having a turnover of INR 40,000 crore has been lifted dramatically.
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•For issuers with market cap INR 1–5 lakh crore → •Companies with <15% float get 10 years (vs 5 •Foreign investors exempt from aggregate •New one-stop guide for FPI registration, |