 "G-sec limit for foreign investors to be raised to Rs 1,79,500 crore")
For foreign portfolio investors (FPIs), the Reserve Bank of India (RBI) will be increasing the investment limit in government securities to Rs 1,79,500 crore by January 1, from the existing Rs 1,53,500 crore. For state development loans (SDLs), the limit will be enhanced to Rs 7,000 crore by January 1; currently it is nil.
Easing norms for foreign ownership of government debt, the Reserve Bank of India (RBI) on Tuesday announced higher investment limits in rupee terms in government securities by FPIs with a view to bringing in an additional Rs 1.2 lakh crore by March 2018.
The announcement follows a decision by RBI to fix FPI investment limits in rupee terms and raise it in phases to reach five per cent of the outstanding stock by March 2018.
For the current financial year, RBI said it has been decided to enhance the limit for investment by FPIs in G-secs in two tranches from October 12, 2015, and January 1, 2016.
Additionally, RBI said there will be a separate limit for investment by all FPIs in SDLs, to be raised in phases to reach two per cent of the outstanding stock by March 2018.
This will amount to an additional limit of about Rs 50,000 crore by March 2018.
The limits for investment by FPIs in G-secs were last raised to $30 billion in June 2013.
The changes are in line with the Medium Term Framework (MTF) for FPI limits in G-secs "to provide a more predictable regime". The MTF was announced by RBI in the fourth bi-monthly monetary policy for the financial year on September 29.
RBI said the effective increase in limits for the following two quarters will be announced every half year in March and September.
"Aggregate FPI investments in any central government security will be capped at 20 per cent of the outstanding stock of the security.
"Investments at existing levels in the securities over this limit may continue, but not get replenished through fresh purchases by FPIs till these fall below 20 per cent," it said.
Operational guidelines relating to allocation and monitoring of limits will be issued by the Securities and Exchange Board of India.
For the moment, RBI said, the security-wise limit for FPI investments will be monitored on a day-end basis and those central government securities in which aggregate investment by FPIs exceeds the prescribed threshold of 20 per cent will be put in a negative investment list.
"No fresh investments by FPIs in these securities will be permitted till they are removed from the negative list. There will be no security-wise limit for SDLs for now," RBI said.
Easing norms for foreign ownership of government debt, the Reserve Bank of India (RBI) on Tuesday announced higher investment limits in rupee terms in government securities by FPIs with a view to bringing in an additional Rs 1.2 lakh crore by March 2018.
The announcement follows a decision by RBI to fix FPI investment limits in rupee terms and raise it in phases to reach five per cent of the outstanding stock by March 2018.
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In aggregate terms, RBI said: "This is expected to open up room for an additional investment of Rs 1.2 lakh crore billion in the limit for central government securities by March 2018 over and above the existing limit of Rs 1.5 lakh crore for all government securities."
For the current financial year, RBI said it has been decided to enhance the limit for investment by FPIs in G-secs in two tranches from October 12, 2015, and January 1, 2016.
Additionally, RBI said there will be a separate limit for investment by all FPIs in SDLs, to be raised in phases to reach two per cent of the outstanding stock by March 2018.
This will amount to an additional limit of about Rs 50,000 crore by March 2018.
The limits for investment by FPIs in G-secs were last raised to $30 billion in June 2013.
The changes are in line with the Medium Term Framework (MTF) for FPI limits in G-secs "to provide a more predictable regime". The MTF was announced by RBI in the fourth bi-monthly monetary policy for the financial year on September 29.
RBI said the effective increase in limits for the following two quarters will be announced every half year in March and September.
"Aggregate FPI investments in any central government security will be capped at 20 per cent of the outstanding stock of the security.
"Investments at existing levels in the securities over this limit may continue, but not get replenished through fresh purchases by FPIs till these fall below 20 per cent," it said.
Operational guidelines relating to allocation and monitoring of limits will be issued by the Securities and Exchange Board of India.
For the moment, RBI said, the security-wise limit for FPI investments will be monitored on a day-end basis and those central government securities in which aggregate investment by FPIs exceeds the prescribed threshold of 20 per cent will be put in a negative investment list.
"No fresh investments by FPIs in these securities will be permitted till they are removed from the negative list. There will be no security-wise limit for SDLs for now," RBI said.