look news india
New Delhi: Market regulator Sebi is working on a mechanism for foreign portfolio investors (FPIs) to get their money on settlement day, which will bring overseas investors at par with other investors in the market.
Speaking at the Global Fintech Fest, Sebi whole-time member Anant Narayan said the market regulator is asking custodians to ensure that FPIs get their money on the second day of trading (T+1), up from the earlier T+2.
The proposed move will help custodians expedite payment of about Rs 1 lakh crore due. This money belongs to clients, lying with intermediaries, on which the entities sometimes earn interest. It is expected that from October 2024, custodians will be able to fund FPIs on the settlement day itself.
Since January this year, the Indian market has completely moved to a T+1 settlement cycle, but most FPIs still get their money after selling securities on T+2 or later. Additionally, India has been testing same-day settlement after the launch of the Vita version in March. However, the response in this case has been slow.
Currently, the custodian provides detailed transaction details to the tax advisor only after settlement, which is T+1. After which the advisor calculates the tea and evening tax. In such a case, this amount is made available to the FPI only on or after T+2, the custodian will provide the FPI transaction details based on the inputs received from the clearing corporation on T+0. So that tax formalities can be completed on T+1 itself. Also, the amount can be sent on the same day.
Sources said the regulator is in talks with four major consulting firms and is also in touch with custodians. However, this change may increase the cost of the process. Sources said NSDL may be made responsible for tax calculation.
