The Telegraph
Thursday , July 24 , 2014
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Tweak in debt rule for foreigners

Mumbai, July 23: The Reserve Bank of India (RBI) today rejigged the limits pertaining to foreign investment in government securities.

It raised the investment limit available to qualified foreign investors (QFIs), foreign portfolio investors (FPIs) and FIIs by $5 billion.

At the same time, the central bank reduced the investment limit available to long-term investors to $5 billion from $10 billion.

Long-term investors include sovereign wealth funds, multilateral agencies, pension funds, insurance funds and foreign central banks.

At present, for investments by FPIs, QFIs and long-term investors in government securities, a limit of $30 billion has been fixed, out of which a sub-limit of $10 billion was available for investment by long-term investors.

“On a review, it has been decided to enhance the investment limit in government securities available to FIIs/QFIs/FPIs by $5 billion by correspondingly reducing the amount available to long term investor from $10 billion to $5 billion within the overall limit of $30 billion,’’ the Reserve Bank of India said in a notification today.

The incremental investment limit of $5 billion given to the foreign investors will have to be invested in bonds with a minimum residual maturity of three years.

However, the central bank clarified that there will be no lock-in period.