The Reserve Bank of India (RBI) today said it will permit foreign institutional investors (FIIs) registered with market regulator Securities and Exchange Board of India (Sebi) and sub-accounts of FIIs to short sell, lend and borrow equity shares from February 1.FIIs were not allowed to engage in short selling previously and were required to take delivery of securities purchased and give delivery of securities sold.The central bank said FII participation in short selling and borrowing or lending of equity shares will be subject to the current foreign direct investment (FDI) policy, which allows FDI ranging from 26% to 100% across different sectors. It added that FIIs will not be permitted to short sell equity shares which are in its banned list.Borrowing of equity shares by FIIs shall only be for the purpose of delivery into short sale and the margin or collateral shall be maintained by FIIs only in the form of cash, RBI said.
