SEBI Working Group Clears Revised CAF Ahead of PAN Regime Shift

Why It Matters

Aligning the CAF with the new PAN framework prevents onboarding bottlenecks for foreign investors, safeguarding capital inflows into India’s equity markets.

Key Takeaways

• SEBI finalised CAF changes ahead of April 1 PAN rollout
• Revised CAF integrates Income‑Tax Forms 95 and 96
• Custodians and DDP Forum suggestions added to CAF
• No formal transition window; old form may be briefly accepted
• Digital signatures already digitised, easing FPI compliance

Pulse Analysis

The Common Application Form (CAF) has become the linchpin of India’s foreign portfolio investor (FPI) onboarding, consolidating securities registration, PAN allocation, and bank‑demat account opening into a single, streamlined document. First introduced in the 2020 FPI framework overhaul, the CAF reduced procedural friction and attracted overseas capital by replacing a patchwork of separate applications. Recent enhancements, such as the adoption of electronic signatures, have further accelerated processing times, positioning India as a more accessible market for global fund managers.

With the Income‑Tax Department’s rollout of new PAN Forms 95 and 96 under the 2026 tax rules, SEBI’s revised CAF is a necessary adaptation. By embedding the updated PAN requisites directly into the CAF, foreign investors can avoid duplicate filings and potential compliance gaps. The integration also reflects feedback from custodians and designated depository participants, ensuring that operational nuances—like account verification and data sharing—are addressed. Although a formal transition period is absent, the informal grace window for legacy forms aims to prevent onboarding disruptions during the switch.

The broader market impact is significant. A seamless CAF transition safeguards the steady flow of foreign capital, which is crucial for India’s equity market depth and liquidity. Moreover, the move underscores SEBI’s commitment to regulatory modernization, aligning with global best practices for investor onboarding. As digital verification becomes standard, custodians and depositories will likely invest in upgraded workflow systems, further reducing manual intervention. In the long term, these efficiencies could enhance India’s attractiveness to passive and active foreign funds, supporting the country’s ambition to become a top destination for international investment.