{"id":39887,"date":"2024-02-27T02:22:46","date_gmt":"2024-02-26T20:52:46","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=39887"},"modified":"2025-04-24T20:33:27","modified_gmt":"2025-04-24T15:03:27","slug":"fpi-fraud","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/fpi-fraud\/","title":{"rendered":"What is the new FPI Fraud SEBI has Warned Investors Against?"},"content":{"rendered":"<h2>What\u2019s in Today\u2019s Article?<\/h2>\n<ul>\n<li>Why in the News?<\/li>\n<li>What is Foreign Portfolio Investment (FPI)?<\/li>\n<li>Benefits of FPI<\/li>\n<li>Difference Between FPI and FDI<\/li>\n<li>News Summary<\/li>\n<li>SEBI\u2019s Clarification<\/li>\n<\/ul>\n<h2>Why in the News?<\/h2>\n<ul>\n<li>The markets regulator Securities and Exchange Board of India (SEBI) has warned individuals against fraudulent trading platforms.<\/li>\n<li>The SEBI has warned that certain trading platforms are falsely claiming or suggesting affiliation with its registered Foreign Portfolio Investors (FPIs).<\/li>\n<\/ul>\n<h2>What is Foreign Portfolio Investment (FPI)?<\/h2>\n<ul>\n<li>Foreign Portfolio Investment (FPI) involves an investor buying foreign financial assets. It involves an array of financial assets like fixed deposits, stocks, and mutual funds.<\/li>\n<li>All the investments are passively held by the investors. Investors who invest in foreign portfolios are known as Foreign Portfolio Investors.<\/li>\n<li>Foreign Portfolios increase the volatility. As a result, it leads to increased risk.\n<ul>\n<li>The intent of investing in foreign markets is to diversify the portfolio and get good return on investments.<\/li>\n<li>Investors expect to receive high returns owing to the risk they\u2019re willing to take.<\/li>\n<\/ul>\n<\/li>\n<li>Securities and Exchange Board of India (SEBI) operates the FPIs.<\/li>\n<li>Recently, SEBI has introduced the Foreign Portfolio Investors Regulations, 2019.<\/li>\n<li>FPIs also need to follow the Income-tax Act, 1961 and Foreign Exchange Management Act, 1999.<\/li>\n<\/ul>\n<h2>Benefits of FPI<\/h2>\n<ul>\n<li>Investment Diversity:\n<ul>\n<li>FPI provides investors an opportunity to diversify their portfolio.<\/li>\n<li>As an investor, you can diversify your portfolio to achieve high returns.<\/li>\n<li>Suppose if you incur major losses in investment assets of a Country X, you can accrue profits in investment assets of a country Y.<\/li>\n<li>In this way, you can experience less volatility in your investments and increase chances of profits.<\/li>\n<\/ul>\n<\/li>\n<li>International Credit:\n<ul>\n<li>Investors can get access to increased amounts of credit in foreign countries.<\/li>\n<li>They can broaden their credit base. By expanding their credit base, investors can secure their line of credit.<\/li>\n<li>In case the domestic credit score is unfavorable, having an international credit score can be beneficial.<\/li>\n<li>This allows the investor to utilize more leverage and get high returns on equity investment.<\/li>\n<\/ul>\n<\/li>\n<li>Access to a Bigger Market:\n<ul>\n<li>Sometimes, foreign market can be less competitive than the domestic market.<\/li>\n<li>Hence, FPI gives you an exposure to a wider market.<\/li>\n<li>The foreign markets are comparatively less saturated and hence, they may offer higher returns and more diversity as well.<\/li>\n<\/ul>\n<\/li>\n<li>High Liquidity:\n<ul>\n<li>Foreign Portfolio Investments provides high liquidity.<\/li>\n<li>An investor can buy and sell foreign portfolios seamlessly.<\/li>\n<li>This offers buying power for investors to act when good buy opportunities arise.<\/li>\n<li>Investors can buy and sell trades in a quick and seamless manner.<\/li>\n<\/ul>\n<\/li>\n<li>Exchange Rate Benefit:\n<ul>\n<li>An investor can leverage the dynamic nature of international currencies.<\/li>\n<li>Some currencies can drastically rise or fall, and a strong currency can be used in investor&#8217;s favour.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2>Difference Between FPI and FDI<\/h2>\n<p>\u00a0<img decoding=\"async\" src=\"https:\/\/vajiramandravi.s3.us-east-1.amazonaws.com\/media\/editor_images\/2024\/2\/27\/12\/44\/29\/65dd8bd5dad39805a68fcb42_OI.PNG\" alt=\"\" \/><\/p>\n<h2>News Summary<\/h2>\n<ul>\n<li>The markets regulator Securities and Exchange Board of India (SEBI) has warned individuals against fraudulent trading platforms falsely claiming or suggesting affiliation with its registered Foreign Portfolio Investors (FPIs).<\/li>\n<li>These platforms are misleading individuals by claiming to offer them trading opportunities through FPI or Foreign Institutional Investor (FII) sub-accounts or institutional accounts with special privileges.<\/li>\n<li>The SEBI said it has received many complaints where fraudsters are enticing victims through online trading courses, seminars, and mentorship programmes in the stock market.\n<ul>\n<li>They are leveraging social media platforms like WhatsApp or Telegram, as well as live broadcasts.<\/li>\n<\/ul>\n<\/li>\n<li>These scamsters are posing as employees or affiliates of SEBI-registered FPIs, and coaxing individuals into downloading applications.\n<ul>\n<li>These applications purportedly allow them to purchase shares, subscribe to IPOs, and enjoy \u2018institutional account benefits\u2019\u2014all without the need for an official trading or Demat account.<\/li>\n<\/ul>\n<\/li>\n<li>These operations often use mobile numbers registered under false names to orchestrate the fraudulent schemes, SEBI, said.<\/li>\n<\/ul>\n<h2>SEBI\u2019s Clarification<\/h2>\n<ul>\n<li>The market regulator clarified that the FPI investment route is unavailable to resident Indians, with limited exceptions as outlined in the SEBI (Foreign Portfolio Investors) Regulations, 2019.<\/li>\n<li>SEBI has not granted any relaxations to FPIs regarding securities market investments by Indian investors.<\/li>\n<\/ul>\n<hr \/>\n<h3>Q1) What is a Hedge Fund in simple terms?<\/h3>\n<p>Hedge fund is a private investment partnership and funds pool that uses varied and complex proprietary strategies and invests or trades in complex products, including listed and unlisted derivatives.<\/p>\n<h3>Q2) What do you mean by Investment Banking?<\/h3>\n<p>Investment banking pertains to certain activities of a financial services company or a corporate division that consist in advisory-based financial transactions on behalf of individuals, corporations, and governments.<\/p>\n<hr \/>\n<p><strong>Source:<\/strong> <a href=\"https:\/\/indianexpress.com\/article\/explained\/everyday-explainers\/what-is-the-new-fpi-fraud-sebi-has-warned-investors-against-9182277\/\" target=\"_blank\" rel=\"nofollow noopener\"><u>What is the new FPI fraud SEBI has warned investors against<\/u><\/a><u> | <\/u><a href=\"https:\/\/timesofindia.indiatimes.com\/city\/mumbai\/sebi-warns-of-trading-frauds-in-name-of-fpi-accounts\/articleshow\/108026923.cms\" target=\"_blank\" rel=\"nofollow noopener\"><u>TOI<\/u><\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Foreign Portfolio Investment (FPI) involves an investor buying foreign financial assets.<\/p>\n","protected":false},"author":5,"featured_media":39888,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-39887","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/39887","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=39887"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/39887\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/39888"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=39887"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=39887"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=39887"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}