RBI increases the investment limit for Foreign Portfolio Investors in debt

Jan 24, 2020 | by Avantis RegTech Legal Research Team

Industry Specific Compliance

The Reserve Bank of India (RBI) on January 23, 2020, has doubled the investment limit for Foreign Portfolio Investors (FPIs) in government and corporate bonds in reference to the Circular No. A.P. (DIR Series) Circular No. 31 dated June 15, 2018 and A.P. (DIR Series) Circular No. 19 dated February 15, 2019 under the Foreign Exchange Management (Debt Instruments) Regulations, 2019.

The followings are the changes made to the Directions:-

 The short-term investment limit is hereby increased from 20% to 30% in Central Government Securities (including Treasury Bills) or State Development Loans and corporate bonds.

 FPI investments in Security Receipts are currently exempted from the short-term investment limit. 

 These exemptions shall also extend to FPI investments in the below mentioned securities:

• Debt instruments issued by Asset Reconstruction Companies; and

• Debt instruments issued by an entity under the Corporate Insolvency Resolution Process as per the resolution plan approved by the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016.

[RBI Notification No. A.P. (DIR Series) Circular No.18]


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