Indian market regulator Sebi has written to several custodian banks requesting details on the beneficial owners of offshore funds and foreign portfolio investors (FPIs), two people with direct knowledge of the matter said on Monday.

While not unprecedented, the move follows a scathing attack on Adani Group by US short-seller Hindenburg Research, accusing it of improper use of offshore tax havens and stock manipulation. The group denies all allegations.

However, the report made markets tumble, with seven Adani companies losing more than $100 billion since January 24.

Foreign investors dumped Rs 288.52 billion ($3.51 billion) worth of Indian stocks in January, data showed.

According to media reports, the Securities and Exchange Board of India (SEBI) last week asked custodian banks, usually foreign banks that manage FPI flows, to contact the investors by March and share details of their findings by the end of September.

“The regulator has sought details of ultimate beneficial owners, particularly where senior managers or fund managers are listed as beneficial owners,” it said.

Suppose the custodian banks do not provide beneficial ownership details. In that case, the regulator will deem these foreign funds ineligible and give them until March 2024 to liquidate their holdings in the Indian market, it added.

“A key condition of foreign portfolio licenses is that investors need to share details of beneficial owners when requested,” the second source said, adding that many funds will now have “senior managers” or fund managers The manager, the manager is called the beneficial owner, which doesn’t give the regulator a fair idea of ​​who is the ultimate owner of the funds.

There are 11,000 foreign funds registered with SEBI.