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NISM Certifications · NISM-Series-VI: Depository Operations · Foreign Portfolio Investors (FPI)

Under the FPI framework, FPIs are classified into categories based on risk. Which of the following best describes the current classification under the SEBI (FPI) Regulations, 2019?

The SEBI (FPI) Regulations, 2019 classify FPIs into only two categories, Category I and Category II. Category I covers low-risk government-related investors, while Category II covers all other eligible FPIs. The earlier three-category structure was replaced.

  1. ACategory I, Category II and Category III
  2. BCategory A, Category B and Category C
  3. CCategory I and Category II onlyCorrect
  4. DRetail, Institutional and Sovereign

Explanation

The 2019 Regulations merged the earlier three categories into two. Category I covers low-risk entities such as government and government-related investors; Category II covers all others not in Category I. The three-tier Category I-III system was the earlier 2014 structure.

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