Tapering Allowed for Transition Period Modalities for Short Term
T-Bill
[RBI
Circular No. 118 dated 7th April 2014]
Sub:
Foreign investment in India in Government Securities
Please
refer to paragraph 24 of first bi-monthly Monetary Policy statement, 2014-15.
2. Attention of
AD Category-I banks is invited to A.P.(DIR Series)
Circular No.94 dated April 1, 2013 read with A.P.(DIR Series) Circular No.111
dated June 12, 2013 and A.P.(DIR Series) Circular No.112 dated March 25, 2014,
in terms of which the present limit for investment in Government Securities by
SEBI registered FIIs, QFIs, long term investors and FPIs registered in
accordance with SEBI guidelines stands at USD 30 billion. Out of the above
limit, a sub-limit of USD 5.5 billion is available for investment in Treasury
Bills (T-bills). Further, in terms of A.P. (DIR Series) Circular No.99 dated
January 29, 2014, a sub-limit of USD 10 billion for investment in Government
dated securities within the total limit of USD 30 billion is available to long
term investors registered with SEBI – viz. Sovereign Wealth Funds (SWFs),
Multilateral Agencies, Pension/ Insurance/ Endowment Funds and foreign Central
Banks.
3. On a review,
to encourage longer term flows, it has now been decided that foreign investment
by all eligible investors including RFPIs shall henceforth be permitted only in
Government dated securities having residual maturity of one year and above and
existing investments in T-bills and Government dated securities of less than
one year residual maturity shall be allowed to taper off on maturity/ sale.
The
revised position in respect of the investment limit in Government dated
securities is given below:
Instrument/s |
Limit |
Eligible
Investors |
Remarks
|
Government
dated securities – Securities having residual maturity of one year and above. |
USD
30 billion |
RFPIs
(including existing FIIs and QFIs) and Long term investors registered with
SEBI – SWFs, Multilateral Agencies, Pension/ Insurance / Endowment Funds and
foreign Central Banks. |
Existing
investment in T-bills and Government dated securities of less than one year
residual maturity shall be allowed to taper off on maturity/sale. No
fresh investment in T-bills and Government dated securities of less than one
year residual maturity allowed. |
4. Necessary
operational guidelines in this regard will be issued by SEBI.
5. All other
existing conditions for investment in Government securities remain unchanged.
6. AD Category –
I banks may bring the contents of this circular to the notice of their constituents
and customers concerned.
7. The directions
contained in this circular have been issued under sections 10(4) and 11(1) of
the Foreign Exchange Management Act, 1999 (42 of 1999) and are without
prejudice to permissions / approvals, if any, required under any other law.