Mumbai: Leading global financial institutions have urged India to implement substantial regulatory and technological reforms, stating that such measures are crucial to attracting more global capital and achieving its ambition of becoming a developed economy.
India is still punching below its weight in attracting global funds despite foreign portfolio investment (FPI) showing strong long-term growth, representatives from the Securities and Exchange Board of India (Sebi), BlackRock, Deutsche Bank, and Bank of America said during a panel discussion at the Global Fintech Fest, 2025.
Aparna Thyagrajan, chief general manager at Sebi, highlighted the strength of foreign investment. She noted that FPI assets under custody in India have nearly tripled in six years, growing from ₹28 trillion in July 2019 to ₹77 trillion ($870 billion) by September 2025. This represents a compound annual growth rate of about 18%, underscoring a positive long-term story despite short-term volatility.
However, Kaku Nakhate, president and India country head at Bank of America, offered a different perspective. She pointed out that of an estimated $100 trillion in global investable funds, India attracts less than 1%, despite accounting for 4% of the world’s GDP.
“We are really not getting our due share,” Nakhate said, emphasizing the need to attract new pools of capital, such as multi-asset, infrastructure, and private credit funds, to finance the country’s economic growth.
The panellists emphasized simplifying the ‘document-heavy’ onboarding process for foreign investors, calling it a key barrier to investment. Simon Williams, a managing director at BlackRock, remarked that he often hears from investors who find the process difficult that they have chosen to “put off India until later” and invested in other markets first.
The panel proposed several solutions to streamline this experience—end-to-end digitalization of the onboarding and KYC (know your customer) processes, and creating a trusted central source for documents to reduce redundancy and address privacy concerns, potentially using blockchain technology. The panel also suggested allowing the use of internationally recognized digital signatures, a measure Sebi has enabled but faced technical hurdles in implementing.
They also suggested enhancing the India Market Access portal from a static information source to a dynamic, user-centric dashboard where investors can view their holdings and KYC status in real-time. Nakhate suggested roping in the Reserve Bank of India (RBI) to create a unified regulatory portal for investors.
Beyond onboarding, the panel also suggested deeper structural reforms to enhance market efficiency. The panellists advocated for implementing trade netting to reduce transaction costs and large currency inflows and outflows.
They also suggested revisiting the securities lending and borrowing (SLB) framework to boost liquidity in the cash market, which currently lags behind the derivatives market, and continue the journey towards T+0 and instantaneous settlement to improve flexibility.
Thyagrajan acknowledged the suggestions, assuring that Sebi is actively working on easing business for FPIs and that inter-regulatory dialogue with the RBI is ongoing. She mentioned that Sebi is exploring how to permit financial netting with minimal regulatory risk.
Janak Dalal, head of securities services of Deutsche Bank added that balancing foreign and domestic investment is key to creating a stable market infrastructure. “That balance between both, who complement each other, will actually create a more stable market infrastructure for our participants,” he said.
