INDIA: New circular on India foreign portfolio investment rules

Wednesday February 11 2015

The Reserve Bank of India has issued a circular on requirements regarding India foreign investment by foreign portfolio investors.

Under the circular, all future investments by an FPI within the limit for investment in corporate bonds are now required to be made in corporate bonds with a minimum residual maturity of three years. Additionally, all future investments against the limits vacated when the current investment runs off either through sale or redemption, are required to be made in corporate bonds with a minimum residual maturity of three years. FPIs are no longer permitted to make any further investment in liquid and money market mutual fund schemes.

Note however that there will be no lock-in period and FPIs are free to sell the securities (including those that are presently held with less than three years residual maturity) to domestic investors.

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