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FPI investment limit in govt securities raised

The RBI on Tuesday raised the debt limit for foreign investors to up to 5% of the current outstanding amount of bonds by March 2018, which will help in additional inflows of about Rs.1.2 lakh crore.

The central bank also added that the limits for foreign portfolio investment in debt securities will henceforth be announced or fixed in rupee terms.

The RBI has also allowed FPI investment into state development loans (SDLs), as part of a broad strategy to open up domestic markets. “Additionally, there will be a separate limit for investment by FPIs in SDLs, to be increased in phases to reach 2% of the outstanding stock by March 2018. This would amount to an additional limit of about Rs.50,000 crore by March 2018,” the RBI release said.

The increase in limits will be announced every half year in March and September and released every quarter.

The RBI also permitted the issuance of rupee bonds in offshore markets with a minimum maturity of 5 years.

There shall be no restriction on the end use of funds, except a small negative list and detailed instructions are being issued separately, RBI’s note added.

Hindustan Times, New Delhi, 30th Sept. 2015

 
     
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