Weeks after the fiasco involving Adani Group and three foreign portfolio investors (FPIs), the National Securities Depository Ltd (NSDL) has changed its website entries to rectify an error that had led to confusion in the stock markets and caused volatility in the price of Adani group shares.

As per the recent changes to the NSDL website, only those demat accounts of the three FPIs, including Albula Investment Fund, Cresta Fund, and APMS Investment Fund, were frozen that had links to the Global Depository Receipt (GDR) issuance matter. NSDL has now added GDR in front of the names of the three FPIs that are mentioned in the list of frozen accounts.

Earlier the confusion arose as NSDL put the three FPIs in the list of frozen accounts. This was picked up by the news and social media and reported that three FPIs were completely banned from operating as their accounts were frozen. However, NSDL's rectification of the error shows that the three FPIs and several others have multiple demat accounts, and the demat depository has frozen only those linked to the GDR matter, the sources told BusinessLine . This simply means that the three FPIs can operate other demat accounts. Through their other accounts, the three funds hold over ₹40,000 crore worth of shares in four Adani Group companies.

GDR is nothing but an instrument issued by Indian companies to raise money in foreign countries. SEBI had investigated GDR issuances, and it claims to have found that several companies were using these instruments to prop up share prices and money laundering. Following this, NSDL had frozen several demat accounts involved in or were holding GDR related shares. In all, more than 9000 demat accounts remain frozen at NSDL for various reasons but its action on the three FPI accounts generated much hype due to the association of Adani group, which is led by Gujarat-based billionaire Gautam Adani.

Albula Investment Fund, Cresta, and APMS Investment Fund together hold 6.82 per cent in Adani Enterprises, 8.03 per cent in Adani Transmission, 5.92 per cent in Adani Total Gas and 3.58 per cent in Adani Green. After the news of NSDL freezing the FPIs was out, the share price of Adani linked stocks witnessed a sharp fall, and the group lost several billions of dollars in market capitalization. Otherwise, in May, Gautam Adani was poised to be the world's wealthiest person. Reliance Industries group remains the one with the highest market cap in India. FPIs have to set up a sub-account with appropriate know your customer (KYC) and other standard diligence processes in India. Further, what gets reported is shareholding above 1 per cent in India, and many funds have significant global exposure too. An email query was sent to NSDL, and their response is awaited.

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