RBI has issued clarification w.r.t Investment by Foreign Portfolio Investors (FPI) in Debt. The FPIs are only permitted to invest in corporate bonds with minimum residual maturity of above one year, in order to bring consistency across debt categories, it is stipulated that investments by an FPI in corporate bonds with residual maturity below one year shall not exceed, at any point in time, 20% of the total investment of that FPI in corporate bonds. It is also clarified that FPIs are permitted to invest in treasury bills issued by the Central Government. The requirement that investment in securities of any category (G-secs, SDLs or, in terms of this circular, corporate bonds) with residual maturity below one year shall not exceed 20% of total investment by an FPI in that category applies, on a continuous basis. In case investments in securities with less than one year residual maturity, as on 02 May 2018 (beginning of day), is more than 20% of total investment in any category, the FPI shall bring such share below 20% within a period of six months from the date of this circular. Further, the term “related entities” shall have the same meaning as defined in section 2(76) of the Companies Act, 2013 and a newly registered FPI would mean FPIs registered after April 27, 2018. The implementation date of online monitoring of utilization of G-sec limits has been set as June 1, 2018. The existing process for monitoring of limits as well as allocation of limit through auction mechanism will continue in the meantime.
Home / Reserve Bank of India / RBI has issued clarification w.r.t Investment by Foreign Portfolio Investors (FPI) in Debt
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