This paper investigates the potential impact of inverter based resources (IBRs) on the well known negative sequence impedance (NSI) element (32Q) based directional relaying scheme. CIGRE-14 bus test system with IBRs is modeled on PSCAD environment. Both the inverter control along with the directional relay scheme are modeled in detail. The test results indicate that the conventional 32Q element will find its limitations in the presence of IBRs. Absence of significant level of negative sequence fault current along with changed angular relationship between negative sequence voltage and current are found out to be the primary causes behind such relay mal-operations. Further, the impact of connections of interconnecting transformer are also analyzed. © 2022 IEEE.