Finance Ministry increases FII investment limit to $15bn

Foreign Institutional Investors (FIIs) can now invest USD 5 billion more in the government securities. This move is expected to increase the participation of FIIs in the government securities. The finance ministry has increased the FII investment limit to USD 15 billion, reports CNBC-TV18's Aakanksha Sethi.

The finance ministry has raised the limit for FII inflow in government securities and corporate bonds to facilitate better access for capital for the corporate sector and encourage FII inflows.
For the government securities, the limit currently stands at USD 10 billion, which has been raised to USD 15 billion. For corporate bonds, the limit for FII inflows stands at USD 15 billion, which has been raised to USD 20 billion.
Last time, this limit was reviewed in 2010. In September 2010 and since then, about 94% of the limit for government securities and about 91% for FII investments in corporate bonds have been used up. So, both these limits are close to exhaust. Hence, the finance ministry raised these limits after a review.
The securities and exchange board of India (SEBI) is expected to notify this in the next few days. From then, the FIIs will be allowed to invest high amounts, which should come as good news for the corporate sector as it has been facing a credit constriction. In case the government surpasses this fiscal deficit target, extra bowering will be easier with this higher limit for FII inflows. Also watch the accompanying video for more details...