Investment
in Govt Securities by FPIs Permitted
[RBI Circular No. 72 dated 5th February 2015]
Sub:
Foreign investment in India by Foreign Portfolio Investors
Attention of Authorized
Dealer Category-I (AD Category-I) banks is invited to schedule 5 to the Foreign
Exchange Management (Transfer or Issue of Security by a Person Resident outside
India) Regulations, 2000 notified vide Notification
No. FEMA.20/2000-RB dated May 3, 2000, as amended from time to time, in terms
of which registered Foreign Portfolio Investors (FPIs) may purchase, on
repatriation basis Government securities and non-convertible debentures (NCDs)
/ bonds issued by an Indian company subject to such terms and conditions as
mentioned therein and limits as prescribed for the same by the Reserve Bank of
India and Securities and Exchange Board of India from time to time.
2. Attention of AD Category-I banks is also
invited to the announcement in the Sixth
Bi-Monthly Monetary Policy Statement, 2014-15, issued on February 03, 2015in
terms of which reinvestment of coupons in Government securities will be enabled
even when the existing limits are fully utilised.
3. Accordingly, FPIs shall be permitted to invest
in government securities, the coupons received on their existing investments in
government securities. These investments shall be kept outside the applicable
limit (currently USD 30 billion) for investments by FPIs in government
securities. AD Category – I banks shall ensure reporting of such investments as
may be prescribed from time to time.
4. The aforesaid directions come into force with
immediate effect. Further operational guidelines will be issued by SEBI.
5. All other existing conditions for investment
by FPIs in the Government securities market remain unchanged for this
additional facility as well.
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.