SEBI approves net settlement of funds in cash market for transactions by FPIs
This story was originally published at 21:03 IST on 23 March 2026
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NEW DELHI – The Securities and Exchange Board of India Monday approved a proposal to allow net settlement of funds for transactions undertaken by foreign portfolio investors in the cash market as part of its efforts to improve ease-of-doing business. The proposal will be implemented by Dec. 31, the SEBI said.
Currently, foreign portfolio investors settle transactions with custodians on a gross basis, requiring separate pay-ins and pay-outs for purchases and sales, which increase funding costs and expose investors to foreign exchange slippages. Under the new framework, foreign portfolio investors will be allowed to settle their net fund obligations for outright transactions in the cash market, where there is either a purchase or a sale of a security within a settlement cycle, thereby reducing the need for additional funding.
For instance, if a foreign portfolio investor buys shares worth INR 1 billion and sells shares of an equivalent value in the same settlement cycle, the payment obligation for the purchase will be adjusted against the sale proceeds, eliminating the need for upfront cash pay-in.
However, settlement of securities will continue on a gross basis between FPIs and custodians, and statutory levies such as securities transaction tax and stamp duty will remain applicable on a delivery basis. "The proposal is expected to reduce the cost of funding for FPIs, particularly on index rebalancing days, when outright purchases and sales occur in incoming and outgoing index constituents, respectively," SEBI said. End
Reported by Gunjan Rajput
Edited by Akul Nishant Akhoury
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