The Reserve Bank of India (RBI) on June 15, 2018 eased the norms for Foreign Portfolio Investors (FPIs) to invest in debt, particularly into individual large businesses.
The move is aimed at attracting more overseas flows. RBI has reviewed the Investment by Foreign Portfolio Investors (FPI) in Debt and based on the feedback received from custodians, FPIs and other stakeholders, it has been decided to provide some operational flexibility as well as transition path for FPIs and custodians to adapt to these regulations.
FPIs will now be permitted to invest in Government securities (G-secs) without any minimum residual maturity requirement, only on condition that short-term investments by an FPI shall not exceed 20 percent of the total investment.
The RBI increased the FPIs cap on investment in government securities to 30 percent of the outstanding stock of that security, from the 20 percent earlier.
The RBI also made it clear that from now onwards no FPI will invest in partly paid debt instruments. These directions would be applicable with immediate effect and earlier directions in this regard stand withdrawn.
The move is aimed at attracting more overseas flows. RBI has reviewed the Investment by Foreign Portfolio Investors (FPI) in Debt and based on the feedback received from custodians, FPIs and other stakeholders, it has been decided to provide some operational flexibility as well as transition path for FPIs and custodians to adapt to these regulations.
FPIs will now be permitted to invest in Government securities (G-secs) without any minimum residual maturity requirement, only on condition that short-term investments by an FPI shall not exceed 20 percent of the total investment.
The RBI increased the FPIs cap on investment in government securities to 30 percent of the outstanding stock of that security, from the 20 percent earlier.
The RBI also made it clear that from now onwards no FPI will invest in partly paid debt instruments. These directions would be applicable with immediate effect and earlier directions in this regard stand withdrawn.
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