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RBI increases investment limit in govt bonds for foreign investors by Rs 14,200 cr

Last week, RBI also removed masala bonds or the rupee-denominated bonds from the corporate debt limit to allow increase in investments by FPIs.

September 28, 2017 / 06:42 PM IST

The total investment limit for foreign portfolio investors (FPI) in government securities for the October to December quarter has been increased by Rs 14,200 crore to Rs 2,89,300 crore, the Reserve Bank of India said on Thursday.

The existing limit stands at Rs 2,75,100 crore.

Effective from October 3, the limits for investment by FPIs for the quarter October-December 2017 is increased by Rs 80 billion (Rs 8,000 crore) in central government securities and Rs 62 billion (Rs 6,200 crore) in state development loans, the central bank said in a notification.

The operational guidelines relating to allocation and monitoring of limits will be issued by the Securities and Exchange Board of India (SEBI).

The development comes as the government gives a push to allow overseas investors to invest more in government bonds and other securities.

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Till September 21, the total investment in the government debt category had reached Rs 1,84,914 crore, 98.52 percent of the total permitted threshold of Rs 1,87,700 crore during the September quarter, as per the latest update with depositories.

The revised limits as on December 2017 to invest in central government securities would be increased from Rs 2,42,000 crore to Rs 2,50,000 crore for (Rs 1,89,700 crore for general + Rs 60300 crore for long-term).

In state development loans, the FPIs can now invest up to Rs 39,300 crore (Rs 30,000 crore general and Rs 9300 crore for long term) as against earlier limit of Rs 28,500 crore.

Last Saturday, the banking regulator also removed masala bonds or the rupee-denominated bonds from the corporate debt limit to allow increase in investments by FPIs. This allows foreign investors to invest an additional Rs 44,001 crore in corporate bonds over the next two quarters (Rs 27,000 crore for the October-December quarter and Rs 17,001 crore for the January to March quarter).
Beena Parmar
first published: Sep 28, 2017 06:39 pm

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