India:
Review Of Investment By Foreign Portfolio Investors In Corporate Debt Securities
06 November 2017
Clyde & Co
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The Reserve Bank of India has vide circular No. 5 dated
September 22, 2017, decided to review the investment in corporate
debt securities by Foreign Portfolio Investors ("FPIs").
Currently, the limit for investment by FPIs in corporate bonds is
INR 244,323 crore. This includes issuance of Rupee denominated
bonds overseas (Masala Bonds) by resident entities of INR 44,001
crore (including pipeline). The Masala Bonds are presently reckoned
both under Combined Corporate Debt Limit (CCDL) for FPI and
External Commercial Borrowings (ECBs). On a review, and to further
harmonise norms for Masala Bonds issuance with the ECB guidelines,
the following changes are made:
- With effect from October 3, 2017, Masala bonds will no longer
form a part of the limit for FPI investments in corporate bonds.
They will form a part of the ECBs and will be monitored
accordingly.
- The amount of INR 44,001 crore arising from shifting of Masala
bonds will be released for FPI investment in corporate bonds over
the next two quarters as specified in the aforementioned
circular.
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