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The Reserve Bank of India has increased the investment limit available to foreign investors to put their money in government securities by $5 billion.
Correspondingly, the central bank also brought down the amount of money that SEBI-registered long-term investors (Sovereign Wealth Funds, Multilateral Agencies, Pension/ Insurance/ Endowment Funds and Foreign Central Banks) can invest in these securities to $5 billion from $10 billion.
$30-billion capAs a result, the overall limit available to foreign investors will remain capped at $30 billion each year.
This rejig in the investment sub-limit implies lack of long-term investor interest in government securities.
The RBI said that the incremental investment limit of $5 billion, made available to Foreign Institutional Investors, Qualified Foreign Investors and Foreign Portfolio Investors, has to be invested in government bonds with a minimum residual maturity of three years.
This means that such short-term investors cannot invest in securities which mature in less than a three-year time frame.
The operational guidelines pertaining to the investments will be issued by SEBI, the RBI said.
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