The Reserve Bank of India vide notification dated 23rd January 2020 has eased the investment norms for foreign portfolio investors in debt. 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 Reserve bank increased the FPIs cap on investment in government security and corporate bonds to 30% outstanding stock of that security, from 20% earlier. FPIs were allowed to invest in government and corporate bonds with a minimum residual maturity of three years.
FPI investments in Security Receipts are currently exempted from the short-term investment limit These exemptions are extended to FPI investments in the following securities vide this notification:
- Debt instruments issued by Asset Reconstruction Companies; and
- Debt instruments issued by an entity under the Corporate Insolvency Resolution Process as per the resolution plan approved by the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016.
Click here to read the Notification.
