Sebi decides to make sales proceeds available to FPIs on settlement day

To boost operational efficiency and respond to concerns raised by Foreign Portfolio Investors (FPIs), Sebi on Wednesday said it has introduced measures to speed up the availability of sale proceeds for such investors, bringing them on par with domestic institutional investors.

It is broadly estimated that efficiency gains on account of this measure would be around Rs 2,000 crore per annum.

FPIs previously reported delays in their access to sale proceeds beyond the standard 'T+1' (trading plus one) settlement date. These delays were primarily due to the erstwhile process adopted for obtaining tax clearance on their net sale proceeds, to ensure compliance with FEMA Regulations.

To address this issue, Sebi engaged in consultations with key stakeholders, including FPIs, clearing corporations, custodians, and tax consultants. This collaborative effort led to significant process improvements, making sale proceeds available to FPIs on settlement day, and bringing them on par with domestic institutional participants.

Under the new system, in place since September 9, tax certificates for FPI sale trades executed on T' day are issued by tax consultants by 9 am IST on 'T+1' day. This allows FPIs to access sale proceeds, either for repatriation or for reinvestment, on the same 'T+1' day, the regulator said in a statement.

The Securities and Exchange Board of India (Sebi) believes these steps will reinforce the country's position as a preferred and efficient investment destination for FPIs, reflecting the regulator's commitment to create an investor-friendly ecosystem.