Tuesday June 26 2012

News Source: Global Disclosures

Focus: Foreign Investment

Type: General

Country: India




In relation to the raised India foreign investment limit in government bonds, it has been decided that the limit of $15 billion USD for FII investment in Government securities in India is to be enhanced with immediate effect by $5 billion USD to $20 billion USD. It has also been decided to rationalize the conditions governing the investments under this scheme by making the residual maturity of the instrument at the time of first purchase by FIIs and SEBI registered eligible non- resident investors in IDFs and foreign Central Banks to be at least three years for a sublimit of $10 billion USD.

Further, in order to broad base the non-resident investor base for Government securities, it has also been decided to allow long term investors like Sovereign Wealth Funds (SWFs), Multilateral agencies, endowment funds, insurance funds, pension funds and foreign Central Banks to be registered with SEBI to also invest in Government securities within this enhanced limit of $20 billion USD.

Furthermore, the conditions for the limit of $22 billion USD including the sub-limit of $5 billion USD with one year lock-in/residual maturity requirement and $10 billion USD for non-resident investment in Infrastructure Debt Funds (IDFs) (which are all within the overall limit of $25 billion USD for investment in infrastructure corporate bonds) have been changed as under:

  • The lock-in period for investments under this limit has been uniformly reduced to one year; and
  • The residual maturity of the instrument at the time of first purchase by an FII/ eligible IDF investor would be at least fifteen months.

Further, as a measure of relaxation, QFIs can now invest in those MF schemes that hold at least 25 per cent of their assets (either in debt or equity or both) in the infrastructure sector under the current $3 billion USD sub-limit for investment in mutual funds related to infrastructure. This relaxation would be subject to review.

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