The limits for investment by
foreign portfolio investors (FPI) in Government securities were last increased
to USD 30 billion. Further, FPIs can invest in securities with minimum residual
maturity of three years only.
Medium Term Framework for
FPI limits in Government securities was announced on September 29, 2015. The
features of the MTF are as under:
i.
The
limits for FPI investment in debt securities will be fixed in Rupee terms.
ii.
The
limits for FPI investment in the Central Government securities will be
increased in phases to reach 5% of the outstanding stock by March 2018.
iii.
There
will be a separate limit for investment by all FPIs in the State Development Loans
(SDLs), to be increased in phases to reach 2% of the outstanding stock by March
2018.
iv.
The
effective increase in limits for the following two quarters will be announced
every half year in March and September.
v.
The requirement
of investments being made in G-sec (including SDLs) with a minimum residual
maturity of 3 years will apply to all categories of FPIs.
vi.
Aggregate
FPI investments in any Central Government security would be capped at 20% of
the outstanding stock.
Accordingly, for the current
financial year, it has been decided to enhance the limit for investment by FPIs
in Government Securities in two tranches from October 12, 2015 and January 1,
2016 respectively as under:
(₹ in billion)
|
|||||
|
Central
Government securities
|
State
Development Loans
|
Aggregate
|
||
For
all FPIs
|
Additional
for Long Term FPIs
|
Total
|
For
all FPIs
(including Long Term FPIs)
|
||
Existing Limits
|
1244
|
291
|
1535
|
Nil
|
1535
|
Revised limits with effect
from October 12, 2015
|
1299
|
366
|
1665
|
35
|
1700
|
Revised limits with effect
from January 1, 2016
|
1354
|
441
|
1795
|
70
|
1865
|
Those Central
Government securities in which aggregate investment exceeds the prescribed
threshold of 20% will be put in a negative investment list. No fresh
investments will be permitted till they are removed
from the negative list. There will be no security-wise limit for SDLs for now.
All other existing conditions will
continue to apply. Operational guidelines relating
to the allocation and monitoring of limits will be issued by SEBI.
Based on RBI Circular dt 6/10/15. Please visit www.rbi.org.in for any
further clarification if required….. Poppy
No comments:
Post a Comment