INDIA: SEBI issue Circular on Investment by Foreign Portfolio Investors in Debt

Wednesday June 20 2018

The Securities and Exchange Board of India (SEBI) has issued Circular No. 31 dated 15 June 2018, which has removed the minimum residual maturity restriction of three years for investment by FPIs in Government securities (G-Secs) and State development loans (SDLs), with effect from 01 June 2018. FPIs will thereafter be permitted to invest in corporate bonds with minimum residual maturity of above one year, subject to the condition that short-term investments (i.e. investment in securities with residual maturity up to 1 year) in corporate bonds by an FPI shall not exceed 20% of the total investment of that FPI in corporate bonds.

Additional revised requirements for FPIs investments in corporate debt securities are included in the Annex to the revised Circular.

It is also clarified that the primary responsibility of complying with monitoring the corporate debt investment limits rests with the FPIs on whose behalf depositories will monitor the investment limits

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