FPIs to get trade proceeds on settlement day, foreign investors to save Rs 2,000 crore per annum: SEBI
MUMBAI: In a major move towards ease of doing business and treating overseas investors on par with their domestic peers, the regulator Sebi has mandated clearing corporations to ensure that foreign portfolio investors (FPIs) get the proceeds from equity or debt sale on settlement day itself. Sebi estimates that efficiency gains from this revised process is around Rs 2,000 crore per annum.
In a statement, on Wednesday, the Sebi said the move is aimed at enhancing the operational efficiency and responding to the concerns raised by FPIs.
Ensuring the availability of sale proceeds for FPIs on the settlement day itself will bring them on par with domestic institutional investors, it said.
FPIs previously reported delays in their access to sale proceeds beyond the standard T+1 settlement date, 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.
Under the new system, in place since September 9, 2024, tax certificates for FPI sales executed on the T-day are issued by tax consultants by 9:00 am the next day (T+1), allowing FPIs to access sale proceeds, either for repatriation or for reinvestment, on the same T+1 day.