Fit and proper test introduced for FII applicants; large investors must use dematerialised settlement after the specified date. The amendment inserts a fit and proper requirement into regulation 6 and into regulation 13(1) as an element of applicant eligibility, and mandates that FIIs and sub accounts meeting a prescribed size threshold must, subject to Board directions, settle transactions entered on or after January 15, 1998 only through dematerialised securities.