In its continuing efforts to have a transparent policy for foreign institutional investors, the Securities and Exchange Board of India is considering the formulation of norms for registration of hedge funds in the country to provide them an investment window and improve quality of their regulation.

The idea for registration of hedge funds with Indian capital market regulator came up during discussions with market participants including foreign institutional investors, Sebi sources said on Tuesday.

Sebi was studying the proposal and would see whether it could provide a window for investment, they said.

Hedge funds is a growing class of investors acting on global basis and "we will study the regulatory reforms initiated by Securities and Exchange Commission of US and European market regulators to deal with these funds," they said.

Once the proposal is ready, it would be placed before Sebi board for final decision, they added.

Meanwhile, Sebi said in a statement on Tuesday that there was no change in the policy towards FII investment in India.

Sebi would amend FII regulations to strengthen the 'know your client' regime and efficacy of the market, the release said.