The technical committee of SEBI and the RBI are expected to meet soon to thrash out the issue

While short selling is currently allowed only in the case of retail investors, SEBI is of the view that all institutional investors should be allowed such facility in order to deepen and widen the market. Also, SEBI points out the move will help domestic institutional investors who have problems of scale.

According to the guidelines, institutional investors like FIIs, mutual funds, banks, insurance companies are mandatorily required to settle trading on the basis of deliveries of securities owned and held by them

While SEBI wants to allow all institutional investors to short sell right from the beginning, the Reserve Bank favours a gradual process starting with domestic institutional investors. SEBI, however, is against piecemeal implementation and would rather wait till permission is granted to all.