To boost inflows of foreign funds into Indian capital markets, regulator Sebi today raised the FPI investment limit in central government securities to Rs 1,40,000 crore from April 4.
It will be further increased to Rs 1,44,000 crore from July 5.
The Securities and Exchange Board of India (Sebi) said there will be a separate limit for investment by all Foreign Portfolio Investors (FPIs) in the state development loans (SDLs).
It has been decided to enhance limit for investment by FPIs in government securities in two tranches from April 4 and July 5.
"Limit for FPIs in central government securities shall be enhanced to Rs 1,40,000 crore on April 4, 2016 and Rs 1,44,000 crore on July 5, 2016 respectively, from the existing limit of Rs 1,35,400 crore," Sebi said in a circular.
In addition, limit for investment by FPIs in state development loans will be enhanced to Rs 10,500 crore on April 4 and Rs 14,000 crore on July 5, respectively. Presently, the existing limit is Rs 7,000 crore.
The limit for long term FPIs (Sovereign Wealth Funds, Multilateral Agencies, Endowment Funds, Insurance Funds, Pension Funds and Foreign Central Banks) in central government securities will be enhanced to Rs 50,000 crore and Rs 56,000 crore on April 4 and July 5, respectively.
Currently, the existing limit is Rs 44,100 crore for long term FPIs.
Earlier in the day, RBI had also relaxed norms of FPI investment in government debt.
The free limit as on April 3 within the Rs 1,35,400 crore limit along with the new debt limits of Rs 4,600 crore will be auctioned on the exchange platform on April 4.
Sebi said that incremental limits of Rs 5,900 crore and Rs 6,000 crore for long term FPIs will be available for investment on tap with effect from April 4 and July 5 respectively.
Besides, incremental limits of Rs 3,500 crore each for investment by FPIs in SDLs will be available for investment on tap with effect from April 4 and July 5, respectively.
"It has been decided that from the next half-year onwards - from October 1, 2016, any unutilised limit within the government debt limit for long term FPIs, at the end of the half-year, shall be made available for investment as additional limit to all categories of FPIs for the subsequent half-year," Sebi said.
Earlier, the limit for overseas investors in securities was hiked to Rs 1,29,900 crore from October 12 last year, and it was further increased to Rs 1,35,400 crore from January 1, 2016.
Prior to the October limit, they were allowed to invest up to Rs 1,24,432 crore in government debt securities through auction.
