Aiming to attract more investment and help arrest the falling rupee the Reserve Bank of India has eased investment norms for foreign portfolio investors (FPIs) in debt, especially into individual large corporates.
According to an official notification, FPIs are permitted to invest in government securities (G-secs), including treasury bills and SDLs without any minimum residual maturity requirement, subject to the condition that short-term investments by an FPI under either category shall not exceed 20% of the total investment of that FPI in that category. Short-term investments are defined as those with residual maturity of up to one year.
FPIs are allowed to invest in various debt market instruments such as government bonds, treasury bills, state development loans and corporate bonds, but with certain limits and restrictions. The RBI increased the FPIs cap on investment in government securities to 30% of the outstanding stock of that security, from the 20% earlier. FPIs were allowed to invest in government bonds with a minimum residual maturity of three years.