Increase in FII debt limit for Government and
Corporate Debt Category
CIRCULAR,
CIR/IMD/FIIC/3/2013, dated February 08, 2013
To
All Foreign
Institutional Investors
Through their
designated Custodians of Securities
1. The Reserve
Bank of India vide circular RBI/2012-13/391, dated January 24, 2013, had enhanced
the limit for investment by FIIs in the Government Debt Long Term category by US$
5 billion to US$ 15 billion and the Corporate non-infrastructure debt category
by US$ 5 billion.
2. In terms of
the aforesaid RBI circular, the changes are summarized below:
a) In the Government Debt Long Term
category, the provision regarding 3 years residual maturity at the time of
first purchase shall no longer be applicable. However, within this category,
FIIs shall not be allowed to invest in short term paper like treasury bills.
b) In terms of the aforesaid circular,
the limit of US$ 5 billion in the Corporate Non-Infrastructure Debt category
shall not be available for investment in Certificate of Deposits (CD) and
Commercial Papers (CP). Investments in Certificate of Deposits are not
permitted within the limit of US$ 20 billion.
c) The US $ 1 billion limit for QFIs
shall continue to be over and above the revised limit of US$ 25 billion
available for FII investment in Corporate non-infrastructure debt category.
d) For the US$ 12 billion sub-category
for investment in Corporate Long Term Infra bonds the following changes have
been made:
i. The restriction of 1 year lock-in
period has been removed
ii. The 5 year initial maturity
restriction has been removed
At the time of first purchase by FIIs,
the residual maturity shall be 15 months.
e) For the sub-category of US$ 10
billion reserved for FII investments in Infrastructure Debt Funds (IDFs), the
restriction of 1 year lock-in has been removed. The requirement of residual
maturity of 15 months at the time of first purchase remains unchanged.
f) Vide circular
CIR/IMD/FII&C/18/2012 dated July 20, 2012, SEBI had permitted QFIs to invest
in those debt mutual fund schemes that hold at least 25 percent of their assets
(either in debt or equity or both) in the infrastructure sector under the US$ 3
billion investment limit for debt mutual fund schemes. These schemes were
required to invest in infrastructure debt having a minimum residual maturity of
5 years. This restriction of 5 years residual maturity has been removed while
the restriction of 3 years initial maturity has been introduced.
3. All the above
changes in lock-in , initial maturity and residual maturity requirements shall apply
for investments by FIIs and Sub-Accounts in debt securities to be made after
the date of this circular.
4. The table
summarizing the revised positions for FII/ Sub-Account investments in Government
securities and Corporate Debt securities is as follows:
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