New Delhi: Institutional investors may soon be able to short sell shares, settled by delivery, in the Indian stock exchanges. The Securities and Exchange Board of India (SEBI) chairman, M Damodaran, has given an indication to this effect here today.

"Short-selling by institutions will soon be allowed," Damodaran told reporters on the sidelines of Financial Planning Congress 2007, organised by the Financial Planning Standards Board India.

The finance minister, P Chidambaram, had said in his Budget speech that institutional investors would be allowed short selling, settled by delivery, and also securities lending and borrowing to facilitate delivery.

An in-principle approval for short-selling by institutional investors, both domestic and foreign, had been given by the SEBI board as far as back as March 22, but the guidelines had yet to be issued.

Meanwhile, Damodaran also said that he expected the Investor Protection Fund (IPF) to be in place by next month. "We need a Board decision to set up this fund. The Board will consider this at its meeting on June 30", he added.