The Reserve Bank of India issued A.P. (DIR Series) Circular No.
19 RBI/2015-16/198, dated October 6, 2015, wherein the limits for
investment by Foreign Portfolio Investors in Government Securities
have been modified.
The RBI in its fourth bi-monthly Monetary Policy Statement (MTF)
for the year 2015-16 has announced a Medium Term Framework for FPI
limits in Government securities. The features of such MTF are as
1. It has been decided that the limits for FPI investment
in debt securities shall henceforth be announced/ fixed in
Here debt securities refer to Government security (G-Sec),
meaning a security created and issued by the Government for the
purpose of raising a public loan or any other purpose as notified
by the Government in the Official Gazette and having one of the
i. Government Promissory Note (GPN) payable to or to the order
of a certain person; or
ii. Bearer bond payable to a bearer; or
iii. Stock; or
iv. Bond held in a Bond Ledger Account (BLA).
2. Further, it has been decided to enhance the limit for
investment by FPIs in Government Securities as follows:
a. Limit for FPIs in Central Government securities would be
increased to INR 1299 billion and INR 1354 billion on October 12,
2015 and January 01, 2016 respectively from the existing limit of
INR 1244 billion.
b. Limit for Long Term FPIs (Sovereign Wealth Funds
(SWFs), Multilateral Agencies, Endowment Funds, Insurance Funds,
Pension Funds and Foreign Central Banks) in Central Government
securities would be increased to INR 366 billion and INR 441
billion on October 12, 2015 and January 01, 2016 respectively from
the existing limit of INR 291 billion.
c. There will be a separate additional limit for investment by
all FPIs in State Development Loans (SDL). The limit under
this will be increased in phases till March 2018, resulting in
additional limit of about INR 500 billion.
3. Also, with regard to FPI investments in Central Government
securities, a security-wise limit of 20% of the amount outstanding
under each Central Government security has been placed.
investments in the Central Government securities where aggregate
FPI investment is over 20% may continue. However, fresh purchases
by FPIs in these securities shall not be permitted till the
corresponding security-wise investments fall below 20%.
4. The Central Government securities in which the aggregate FPI
investment is more than 20% of the outstanding would be placed in a
negative investment category in which fresh investments would not
be permitted till they are removed from the negative list.
Security-wise limits for SDLs have not been specified.
5. All other existing conditions, with regard to investments by
FPIs in G-sec, including investments of coupons being permitted
outside the limits and investments being restricted to securities
with a minimum residual maturity of 3 years, will continue to
The operational guidelines relating to allocation and monitoring
of limits have to be issued by the Securities Exchange Board of
India (SEBI). The SEBI in this regard issued circular dated October
6, 2015 outlining the limits with regard to the investments by FPIs
in the G-sec.
Also, the SEBI asked the depositories (NSDL and CDSL) to put in
place the necessary systems for the daily reporting by the
custodians of the FPIs and to disseminate on their websites the
negative investment list, the aggregate security-wise holdings by
FPIs and the coupon investment data along with the daily debt
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The MDO Guidelines further state that the intent of the MCA was for the purpose of achieving a standard contractual arrangement that may be entered into across the country for procurement of such services.
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