SEBI Levied Penalty of ₹50 Lakh on Nexpact, AIRD Investment and Aviator Global Investment

On February 24, 2025, the capital market regulator, the Securities and Exchange Board of India (SEBI), levied a total penalty of ₹50 lakh on 3 foreign portfolio investors (FPIs) for exceeding the prescribed limits on short-term investments in debt securities. These violations, some of which lasted up to two years, were discovered following an inspection of their custodian, Orbis Financial Corporation, for FY22.

SEBI fined Nexpact Ltd and AIRD Investment Commercial LLC ₹ 20 lakh each, while Aviator Global Investment Fund was penalized ₹ 10 lahks. The fines were imposed for violations of RBI regulations, which limit short-term investments to 30% of an FPI’s total investments in any category, in order to maintain stability in the debt market.

Investigation by SEBI

SEBI’s investigation revealed that AIRD Investment Commercial LLC exceeded the 30% short-term investment limit for 562 days, from December 2021 to November 2023, holding investments in short-term debt securities well beyond the allowed threshold.

Similarly, Nexpact Ltd breached the limit for 586 days, from December 2021 to July 2023. While the company acknowledged the oversight and took corrective steps, SEBI determined that the prolonged non-compliance warranted a substantial penalty.

Aviator Global Investment Fund violated the short-term investment cap for 373 days, from September 2021 to October 2022.

Conclusion

SEBI conducted a thorough review of compliance with both SEBI’s and RBI’s foreign investment regulations, covering the period from April 2018 to November 2023. Given the important role FPIs play in India’s debt markets, such violations highlight concerns about risk management and regulatory oversight.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.