New Delhi, Nov. 17: Foreign institutional investors can put in another $5 billion each in government securities and corporate bonds.

The finance ministry today increased the FII investment limit to $15 billion in government securities (G-secs) and $20 billion in corporate bonds to spur overseas capital inflow and arrest the slide of the rupee.

Funds abroad can now invest a total of $45 billion under corporate bonds if the $25 billion allowed for infrastructure financing is included.

“The policy has been reviewed in the context of the evolving macroeconomic situation, the need for enhancing capital flows and making available additional financial resources for the corporate sector,” Thomas Mathew, joint secretary in the finance ministry, said.

“The move will increase investment in debt securities and help to develop the government securities and corporate bond markets,” he said.

The official said the increase in investment limits became necessary as “little space was available for further FII investment in G-secs and corporate bonds”.

The stock market regulator is soon expected to notify the latest changes, he said.

As on October 31, FIIs have invested Rs 41,253 crore in government securities against the limit of Rs 43,650 crore. Corporate bonds managed to get Rs 68,289 crore against a ceiling of Rs 74,416 crore.

Investors can now buy bonds of any tenure under the $5 billion cap hike, unlike previous changes when the additional investment window was limited to long-term bonds.

The hike in FII investment limit for corporate bonds will increase the resource availability for companies that are constrained by the high domestic interest rates.

The government had last raised the FII limit for local debt in September 2010.

Analysts said the move could help arrest the slide of the rupee, which had shed 14 per cent against the dollar so far this fiscal.

The government’s gross market borrowing for 2011-12 will rise to Rs 4.7 lakh crore, up from the budgeted Rs 4.17 lakh crore. In the previous fiscal, the gross borrowing was Rs 4.37 lakh crore.

The official said the government was planning to allow qualified foreign investors to buy shares directly in the stock market.

“We are considering allowing qualified foreign investors to invest directly in the stock market,” an official said.