An applicant can obtain FPI license in one of the two categories as mentioned below:

Category I

• Government and related investors
• Pension funds and university funds
• Appropriately regulated entities such as insurance/ reinsurance entities, banks, asset management companies, investment managers, investment advisors, portfolio managers, broker dealers and swap dealers
• Entities from FATF member countries or any other country specified by the government by an order/agreement/treaty with other sovereign governments, which are:
  -Appropriately regulated funds
  -Unregulated funds whose investment manager is appropriately regulated and is registered as a Category I FPI
  -University related endowments of such universities that have been in existence for more than five years
• Entities whose investment manager is from FATF member country and registered as a category I FPI; or
• Entities which are at least 75% owned, directly or indirectly, by entities from FATF member countries under second, third and fourth category mentioned above

Category II

Category II FPIs shall include all the investors not eligible under Category I FPI such as –

• Appropriately regulated funds not eligible as Category-I FPI
• Endowments and foundations
• Charitable organizations
• Corporate bodies
• Family offices
• Individuals
• Appropriately regulated entities investing on behalf of their client, as per conditions specified by SEBI periodically
• Unregulated funds in the form of limited partnership and trusts

An FPI applicant must comply with the following criteria:

• Applicant should not be a Resident Indian (RI) or Non-Resident Indian (NRI) or Overseas Citizen of India (OCI). RI, NRI and OCI can be constituents of the FPI applicant subject to the following conditions:
  -RIs/NRIs/OCIs are not in control of the applicant
  -Contribution of a single RI or NRI or OCI and aggregate contribution is below 25% and 50%, respectively, of the total contribution in the corpus of the FPI applicant
  
The above two conditions do not apply in case of a non-investing FPI or if the FPI applicant proposes to invest or invests only in units of mutual fund schemes in India.
• Resident Indian other than individuals can be constituents of the FPI applicant provided:
  -Such entity is an eligible fund manager of the applicant as per sub-section (4) of section 9A of the Income Tax Act, 1961
  -Applicant is an eligible investment fund as provided under sub-section (3) of section 9A of the Income Tax Act, 1961
  -Applicant is an Alternative Investment Fund (AIF) setup in the International Financial Services Centres (IFSC) and regulated by the IFSC Authority
  -Such entity is a Sponsor or Manager of the applicant
  -Contribution of such entity is up to:
  :-2.5% of the corpus of the applicant or USD 7,50,000 (whichever is lower), in case the applicant is a Category I or Category II AIF; or
  :-5% of the corpus of the applicant or USD 1.5 million (whichever is lower), in case the applicant is a Category III AIF
• Resident of a country whose securities market regulator is a signatory to IOSCO's MMOU or a signatory to bilateral MoU with SEBI
• If the applicant is Government / Government related investors from a country which is neither signatory to MMOU nor has a bilateral MoU with SEBI – such countries must be approved by the Government of India
• If the applicant is a bank, the applicant should be a resident of a country whose central bank is a member of Bank for International Settlements (BIS). However, Central banks applying for FPI registration need not be BIS member
• Applicant or its investors contributing 25% or more of the corpus, or having control, should not be part of the United Nations Security Council's Sanctions list or a resident of a country identified by FATF as a jurisdiction having strategic AML/CFT deficiency that has not made sufficient progress to address the deficiencies
• Legally permitted to invest in securities outside the country of incorporation / establishment / place of business
• Authorised by Constitutional documents – Memorandum of Association and Articles of Association or equivalent, to invest on its own behalf and on behalf of clients
• Comply with the 'Fit and Proper' person criteria specified in Schedule II of the SEBI (Intermediaries) Regulations, 2008
• In case the applicant is an Offshore fund of an Indian mutual fund, or if the applicant is controlled by an Investment Manager (IM) which is controlled and/or owned by RI/NRI/OCI, the IM should be appropriately regulated in its home jurisdiction and registered as a non-investing FPI. Further, the IM should be incorporated under Indian laws and registered with SEBI.

Category 1 – All Insurance entities, Funds from FATF member countries, banks, asset management companies, investment managers/advisors, portfolio managers, broker dealers and swap dealers, University funds and pension funds, university related endowments already registered with the Board as foreign institutional investors or sub-accounts, and unregulated funds/entities where the regulated Investment Manager is from a FATF member country.

Category 2 – Funds from non-FATF member countries and unregulated funds/entities where the regulated Investment Manager is from a non-FATF member country, corporates, individuals, family offices, and partnership funds.

A Foreign Government Agency is an arm/department/body corporate of a government, or is set up by a statute, or is majority (i.e. 50% or more) owned by the government of a foreign country.

To ascertain whether an entity is regulated in the same capacity, the DDP may verify whether the FPI applicant is permitted to carry out such activity under its license/registration granted by its regulator.

Private Banks and Merchant Banks that are regulated by an "appropriate regulator" may be classified as Category I. Further, such entities shall be allowed to undertake only proprietary investments.

Appropriately regulated entities such as banks and merchant banks, asset management companies, investment managers, investment advisors, portfolio managers, insurance & reinsurance entities, broker dealers and swap dealers will be permitted to undertake investments on behalf of their clients as Category II FPIs, in addition to undertaking proprietary investment by taking separate registrations as Category I FPI.

Where such entities are undertaking investments on behalf of their clients, Category II FPI registration shall be granted subject to the following conditions:

• Clients of the FPI can only be individuals and family offices.
• Clients of the FPI should also be eligible for registration as FPI and should not be dealing on behalf of a third party.
• If the FPI is from a FATF member country, then the KYC including identification & verification of the beneficial owner of the clients of such FPI should be done by the FPI as per the requirements of its home jurisdiction. FPIs from non-FATF member countries should perform KYC of their clients, including identification and verification of beneficial owner, as per Indian KYC requirements.
• The FPI has to provide complete investor details of its clients (if any) on a quarterly basis (end of calendar quarter) by the end of the following month to the DDP.

An FPI applicant who is aggrieved by the decision of the DDP may, within a period of 30 days from the date of receipt of communication of rejection, apply to SEBI for reconsideration of the decision of the DDP. However, such an application to SEBI for reconsideration shall not be made where the rejection was made for technical reasons, such as submission of incomplete information or non-submission of documents required under the FPI Regulations, or for commercial reasons such as the quantum of charges levied.

The DDP may obtain the requisite declaration from the applicant for satisfying the eligibility criteria under Regulation 4 of the Regulations and the conditions mentioned below relating to NRIs, OCIs and/or RIs being constituents of the applicant. Where NRIs, OCIs or RIs are constituents of the applicant:

• The contribution of a single NRI, OCI or RI shall be below twenty-five percent of the total contribution in the corpus of the applicant.
• The aggregate contribution of NRIs, OCIs and RIs shall be below fifty percent of the total contribution in the corpus of the applicant.

No, NRIs, OCIs and RIs shall not be in control of the applicant. This is not applicable if the applicant is an 'offshore fund' for which a 'No Objection Certificate' has been issued by the Board under the SEBI (Mutual Funds) Regulations, 1996, or is controlled by an Investment Manager which is controlled and/or owned by an NRI, OCI or RI, if the following conditions are satisfied:

• Such Investment Manager is appropriately regulated in its home jurisdiction and registered with the Board as a non-investing FPI, or
• Such Investment Manager is incorporated or set up under Indian laws and appropriately registered with the Board.

No, FPIs that are non-investing or that invest only in units of schemes floated by mutual funds in India don't need to meet the conditions regarding NRI/RI/OCI.

If an FPI registered under a particular category fails to comply with the applicable eligibility requirements, it shall be reclassified under the appropriate category. For this purpose, the FPI shall be required to provide the DDP with additional KYC documents as applicable. The concerned Custodian shall not allow such FPI to make fresh purchases until the KYC documentary requirements, as applicable, are complied with. However, such FPI shall be allowed to continue to sell the securities already purchased by it.

The DDP may verify if the applicant is regulated or supervised, by the securities market regulator or banking regulator through any one of the following:

• Obtain a copy of certificate issued by such regulator or;
• verify the registration details directly from the registry or the website of such regulator.

The residency status of the FPI applicant may be ascertained from the tax residency status or from the place of incorporation/establishment through appropriate document such as ID issued by the Income Tax authority or appropriate incorporation document. List of countries where the securities market regulator is a signatory to IOSCO MMOU shall be verified by the DDP from the website of IOSCO.
The current weblink is given below: http://www.iosco.org/library/index.cfm?section=mou_siglist List of countries that have bilateral MOU with SEBI shall be verified by the DDP from the website of SEBI.
The current weblink is given below: http://www.sebi.gov.in/cms/sebi_data/attachdocs/MoUSebi.pdf The list of countries whose Central Bank is a member of the BIS shall be verified by the DDP from the website of BIS.
The current weblink is given below: http://www.bis.org/about/orggov.htm List of countries that are listed in the public statements issued by FATF shall be verified by the DDP from the website of FATF.
The current weblink is given below: http://www.fatf-gafi.org/topics/high-riskandnon-cooperativejurisdictions

Yes. The DDP is required to check that the registration/license granted by its regulator has not been cancelled and is still valid.

Any past action taken by an applicant’s regulator may not necessarily render such an applicant ineligible as long as such action did not result in cancellation of its registration.