RBI & Sebi to Take a Final Call on FPIs’HDFCBankTradesToday
by foreign portfolio investors led to a breach of their maximum limit in HDFC Bank on Friday
Mumbai: The Reserve Bank of India and the Securities and Exchange Board of India (Sebi) will take a final call on the purchases in HDFC Bank done by foreigners after 1:39 PM on Friday once the settlement of trades is done on Wednesday. Frenzied purchases by foreign portfolio investors had led to a breach of their maximum purchase limit in HDFC Bank on Friday after the Central bank, the previous evening, lifted curbs on fresh buying by overseas investors in the private lender with their stake dropping below the prescribed limit.
Though the RBI clamped down on foreign purchasesmid-waythroughthetradingday, many trades had already been executed, prompting the Central bank to ask all custodians not to settle trades in HDFC Bank done after 1.39 PM on Friday in which foreigners were buyers.
The regulators said they would get an exact picture of FPI transactions in HDFC Bank that happened after 1:39 PM on Friday.
“We will come to know once the settlement is done on Wednesday and will resolve the issue,” said a regulatory official.
Sebi on Monday asked custodians — foreign banks — to provide details of the number of trades and shares involved in the HDFC Bank stock after RBI notification time and the number of trades involved after the stock exchange notification time on February 17.
It is learnt that the RBI notification was sent to custodians on Friday around 12.56 PM after the regulator noticed the FII limit was breached. But, the stock exchange notification came in only by 1.39 PM.
The regulators could put the onus on the brokers, who executed the trades, or FPIs to resolve the matter.
“All custodians have confirmed trades till 1.39 PM. Any trade after the cut-off time may either devolve on the broker or the regulator may give some time to the foreign portfolio investor (FPIs) to bring down their holding,” said a person involved in the discussion with the regulators.
Stock exchanges said they were yet to receive any direction from the regulators on the matter.
“If exchanges don’t annual the trades, then brokers will have to take those trades on their books,” said a senior stock exchange official. “Stock exchanges can annul the trades, but so far we have not received any communication from Sebi or the central bank,” he added.