SEBI on 29th March 2016 has notified, its decision to enhance
the limit for investment by FPIs in Government Securities, for the
next half year, RBI had previously announced a Medium Term
Framework (MTF) for FPI limits in Government securities in
consultation with the Government of India.
Key Highlights of the Circular is as follows:
Limit for FPIs in Central Government
securities shall be enhanced to INR 140,000 cr on April 04, 2016
and INR 144,000 cr on July 05, 2016 respectively from the existing
limit of INR 135,400 cr.
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 shall be enhanced to INR 50,000 cr
and INR 56,000 cr on April 04, 2016 and July 05, 2016 respectively
from the existing limit of INR 44,100 cr.
The limit for investment by all FPIs
in State Development Loans (SDL) shall be enhanced to INR 10,500 cr
on April 04, 2016 and INR 14,000 cr on July 05, 2016 respectively
from the existing limit of INR 7,000 cr.
Accordingly, the revised FPI debt limits would be as
Cap (INR cr)
Cap w.e.fApril 04, 2016 (INR cr)
Cap w.e.f July 05, 2016 (INR cr)
Government Debt –
Keeping in view the extent of utilization of the limits for
Central Government securities by long term and other investors, it
has also been decided that from the next half-year onwards i.e.
from October 01, 2016, any unutilized limit within the Government
debt limit for Long Term FPIs, at the end of the half-year, shall
be made available for investment as additional limit to all
categories of FPIs for the subsequent half-year.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The issuance of rupee denominated bonds overseas (Masala Bonds) was permitted by RBI's circular dated 29 September 2015 read with the relevant provisions of the Master Direction dated 1 January 2016 on External Commercial Borrowings, Trade Credit, Borrowing and Lending in Foreign Currency by Authorised Dealers and Persons other than Authorised Dealers.
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