RBI permits short selling of equity shares by FIIs

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Mumbai, Jan 1 (UNI) The Reserve Bank of India (RBI) has permitted foreign institutional investors (FIIs) for short selling, lending and borrowing of Indian equity shares.

FIIs registered with Securities and Exchange Board of India (SEBI) and sub-accounts of FIIs can short sell, lend and borrow equity shares of Indian companies on certian conditions, RBI said in a notification today.

''Short selling, lending and borrowing of equity shares of Indian companies shall be subject to such conditions as may be prescribed in that behalf by the Reserve Bank and the SEBI or other regulatory agencies from time to time,'' RBI said.

The Apex Bank also mentioned the conditions on which the FIIs could participate in short selling as well as lending and borrowing.

Borrowing of equity shares by FIIs will only be for the purpose of delivery into short sale and it will not be permitted for equity shares that are in the ban list or caution list of the Reserve Bank, the Apex Bank notified.

Subsquently, for the purpose of monitoring, the Central Bank directed the custodian banks to report all transactions pertaining to short selling of equity shares and lending and borrowing of equity shares by FIIs in their daily reporting with a suitable remark.

Earlier, FIIs were not allowed to engage in short selling and were required to take delivery of securities purchased and give delivery of securities sold.

UNI PP NM VKG1910

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