Custodians plan to charge higher fee from foreign portfolio investors

Regulatory officials say gains from faster payout will outweigh increased costs

Custodians, who act as brokers for foreign portfolio investors (FPIs), plan to increase fees once the market regulator’s directive on faster remittances comes into effect on September 9.

The Securities and Exchange Board of India (Sebi) has introduced same-day remittances for FPIs, allowing them to access funds on the next-day (T+1) basis as opposed to the current T+2 basis.

The move is expected to benefit FPIs from custodians who may face reduced interest income they pocket from client funds.

At present, custodians pocket interest — similar to the overnight bank rates — on Rs 1 trillion float.

Regulatory officials believe the