The clarification comes in the backdrop of apprehensions among market participants regarding whether inclusion of Mauritius in the 'grey list' would affect the registration of FPIs from Mauritius. Financial Action Task Force (FATF) recently placed the island country on the grey list.

"FPIs from Mauritius continue to be eligible for FPI Registration with increased monitoring as per FATF norms," said the statement by the Securities and Exchange Board of India (SEBI).

SEBI added that as per the FATF website that when a jurisdiction is placed under increased monitoring, it construes that the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring.

"The FATF does not call for the application of enhanced due diligence to be applied to these jurisdictions, but encourages its members to take into account this information in their risk analysis. The intermediaries should take note of the same," the SEBI statement said.

Additionally, FATF identifies jurisdictions that have significant strategic deficiencies in their regimes to counter money laundering, terrorist financing, and financing of proliferation.

For all such countries, the FATF calls on all members and urges all jurisdictions to apply enhanced due diligence, and in the most serious cases, countries are called upon to apply counter-measures to protect the international financial system. This list is often referred to as the "black list", SEBI said.

A major share of foreign portfolio investors (FPIs) investing in the Indian market is registered in Mauritius, the second largest source of FPIs for India after the US.