Money & Banking

FII investment sub-limit in G-secs raised by $5 b

PTI Mumbai | Updated on July 23, 2014

The RBI today said the FII limit for investment in government securities has been increased by $5 billion within the total cap of $30 billion.

The central bank said the limit has been enhanced by reducing the investment limit for long term investors from $10 billion to $5 billion.

“It has been decided to enhance the investment limit in Government securities available to FIIs (Foreign Institutional Investors)/QFIs (Qualified Foreign Investor)/FPIs (Foreign Portfolio Investors) by $5 billion by correspondingly reducing the amount available to long-term investor from $10 billion to $5 billion within the overall limit of $30 billion,” an RBI notification said.

Long-term investors include sovereign wealth funds (SWFs), multilateral agencies, pension, insurance funds and foreign central banks registered with Sebi.

Earlier this year, the limit for long-term investors for investment in government securities was raised from $5 billion to $10 billion within the total limit of $30 billion available to them.

The RBI, however, said the increment investment limit of $5 billion shall be required to be put in government bonds with a minimum residual maturity of three years.

It further said all future investment against the limit vacated, when the current investment by an FII/QFI/FPI runs off either through sale or redemption shall, also be required to be made in Government bonds with a minimum residual maturity of three years.

“There will be no lock-in period and FIIs/QFIs/FPIs shall be free to sell the securities to the domestic investors,” the notification said.

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Published on July 23, 2014
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