SEBI to resolve HDFC Bank FII trading confusion

On Monday, the Securities and Exchange Board of India (SEBI) will meet to discuss the issue of foreign institutional investor holding in HDFC Bank overshooting the statutory 74 per cent limit. After releasing restriction on FIIs buying in the stock, there was tremendous response from foreign institutional investors on Friday which led to the statutory limit being crossed.

The stock exchanges flashed Reserve Bank of India (RBI) notification about the breach of the limit at 1.40 pm. Both NSE and BSE have already clarified the custodians of the FIIs that purchases made after notification will not be settled.

Some pending orders in the trading system got executed after 1:40pm on last Friday, before they could be withdrawn However, there is no clarity on how much the 74 per cent limit has been overshot by. A little over 7 crore shares i.e. around 3.5 per cent of the equity base resulted in delivery on both the exchanges combined.

This is the first time that the RBI had to issue a notification banning purchases by FIIs in the middle of a trading session. Usually such announcements are made after trading hours when custodians submit the details of their purchases to the RBI. The central bank usually raises a red flag when the FII holding in a stock is 2 per cent away from either the statutory limit for a sector or a company board-approved limit, which varies across firms.