The Securities and Exchange Board of India has proposed to tighten disclosure standards for certain ‘high-risk’ foreign portfolio investors who funnel more than 50 per cent of their equity assets under management (AUM) into a single corporate group.

A discussion paper floated by the market regulator says it is mulling the possibility of forcing these FPIs to lift the veil of secrecy and reveal the identities of the natural persons lurking behind a byzantine network of opaque entities that steer investments into the Indian stock markets and entities belonging to large conglomerates.

High-risk FPIs with an overall holding of over Rs 25,000 crore in Indian equity markets will also be required to comply with the additional disclosure requirements within six months.

The regulator estimated that FPIs holding around 6 per cent of total FPI equity AUM — or roughly Rs 2.6 lakh crore — would be forced to provide additional disclosures.

New FPIs that have just begun investments will be allowed to cross the 50 per cent group concentration threshold up to a period of six months without the need for additional disclosures.

Earlier this month, Sebi appeared to have received a rap across the knuckles after a Supreme Court-appointed panel of experts looking into certain aspects of US short-seller Hindenburg Research’s allegations against the Adani group said Sebi had watered down FPI regulations in 2019, allowing shadowy persons behind the funds to conceal their identities behind “opaque structures”.

It wasn’t immediately clear whether Sebi —smarting under those withering remarks — had rushed to prepare the discussion paper.

The regulator has invited public comments in response to the proposals by June 20.