Mumbai: Clearing the ambiguity surrounding its Monday evening message to foreign institutional investors (FIIs), capital markets regulator Securities and Exchange Board of India (Sebi) on Wednesday made it clear that its “disapproval” of stock lending and borrowing overseas essentially meant a ban on such activity.

Sebi chairman C.B. Bhave communicated this to FIIs at a meeting. Sebi expects these investors not to indulge in such activities, said a senior official at the regulator who did not want to be named.

Sebi issued a statement on Monday, saying it “disapproves” the parallel overseas market or activities conducted by FIIs with the Indian equities they hold on behalf of other investors—through so-called participatory notes (PNs).

Last week, Sebi had asked for data on such activities from FIIs. “Till now data show such activities exist. We need to see the latest data after we issued the statement disapproving it. We hope we will see the change,” added the Sebi official.

Sebi’s move comes after local brokers, politicians and chief executives of some firms, whose share prices fell sharply, cried foul at intense short-selling by FIIs.

The regulator has not banned short-selling in India. Large foreign brokerages operating in India including Goldman Sachs Group Inc. andCitigroup are the biggest issuers of PNs. These FIIs have been lending their PN stock inventory to short-sellers, mainly from their Hong Kong units.