INDIA: SEBI increases Foreign Investment Limits in Government Securities

Thursday March 31 2016

The Indian capital market regulator, SEBI, has issued Circular IMD/FPIC/CIR/P/2016/45 outlining the enhanced limits for investments for Foreign Portfolio Investors (FPI’s) in Government Securities, for the next half year, (initially detailed in Circular CIR/IMD/FPIC/8/2015 dated 06 October, 2015) as follows:

• The limit for FPI’s in Central Government securities shall be enhanced to INR 140,000 cr on 04 April, 2016 and INR 144,000 cr on 05 July 2016 from the existing limit of INR 135,400 cr.
• The limit for long term FPI’s (Sovereign Wealth Funds, Multilateral Agencies, Endowment Funds, Insurance Funds, Pension Funds, and Foreign Central Banks) in Central Government securities shall be enhanced to INR 50,000 cr on 04 April 2016 and INR 56,000 cr on 05 July, 2016 from the existing limit of INR 44,100 cr.
• The limit for investment by all FPI’s and State Development Loans (SDL) shall be enhanced to INR 10,500 cr on 04 April, 2016 and INR 14,000 cr on 05 July, 2016 from the existing limit of INR 7,000 cr.

Therefore the revised FPI limits are increased from the current limit of INR 186,500 cr to INR 200,500 cr. on 04 April 2016 and INR 214,000 cr. on 05 July 2016. The Circular shall come into effect immediately.

The free limit as on 03 April, 2016, within the INR 135,400 cr limit along with the new debt limits of INR 4,600 cr will be auctioned on the exchange platform on 04 April, 2016

Additionally Incremental limits of INR 5,900 cr and INR 6,000 for long term FPI’s shall be available for investment on tap with effect from 05 July, 2016.

Incremental limits of INR 3,500 cr each for investment by FPI’s in SDL’s shall be available for investment on tap with effect from 04 April, 2016.

Furthermore, from the next half year onwards (i.e. 01 October 2016 onwards), any unutilised limit within the Government debt limit for long term FPI’s, at the end of the half year, shall be made available for investment as additional limit to all categories of FPI’s for the subsequent half year.

All other existing terms and conditions, including the security-wise limits, investment of coupons being permitted outside the limits and investments being restricted to securities with a minimum residual maturity of three years, shall continue to apply.

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