Mutual funds (MFs), foreign portfolio investors (FPIs) and corporate treasuries were caught off guard by the shift in settlement holiday last week, requiring intervention by the Reserve Bank of India and the Securities and Exchange Board of India.
On Wednesday, MFs and other lenders had parked their excess cash in T+2 Treasury Bills Repurchase, or TREPs, with CCIL, which was to be settled on Friday. The bank holiday was postponed by a day to Friday, post market hours on Wednesday. This led to a peculiar situation as MFs were now required to meet the settlement obligations for equity purchases on Thursday but had their cash locked in until Friday.
