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VOL. I · EST. 11.2025 
SatyaDheesh
सत्याधीश
India's Ground Truth Record
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SEBI plans 15%-20% drop in collateral for liquid stocks to lure back foreign investors

GS3Economy · S&T · Environment · Security· Capital markets & SEBI· Prelims + Mains·

Why in news

SEBI plans to lower collateral requirements for liquid stocks by 15%-20% to attract foreign institutional capital following a significant sell-off by foreign investors.

Background

SEBI intends to reduce collateral requirements for highly liquid stocks by 15% to 20%. These reforms aim to counter a trend where foreign ownership hit a 17-year low and over $50 billion in Indian equities were sold between October 2024 and June 2026.

Facts for Prelims

  • BodySEBI: The primary regulator for the securities and capital markets in India.
  • FactForeign ownership in Indian equities hit a 17-year low as of the reporting period.
  • FactOver $50 billion worth of Indian equities were sold by foreigners between October 2024 and June 2026.

For Mains

Q. Discuss the significance of capital market reforms in attracting Foreign Institutional Investment (FII) and their impact on India's macroeconomic stability.

Dimensions to cover in your answer

  • liquidity and market accessibility
  • impact on foreign exchange reserves
  • volatility management
  • long-term capital formation

Keywords: Capital Market Reform · Foreign Institutional Investment (FII) · Market Liquidity · Collateral Requirements · Derivatives Trading

Read the full news →Report a mistake in this noteSource: Economic Times ↗

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