RBI
Merges Broadbands FII Debt Categories
[RBI
Circular No. 94 dated 1st April 2013]
Sub:
Foreign investment in India by SEBI
registered FIIs in Government Securities and Corporate Debt
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 SEBI registered Foreign Institutional Investors (FIIs) and long term
investors 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 RBI and SEBI from time to time.
2. Attention of
AD Category-I banks is also invited to A.P.(DIR Series) Circular No.80 dated
January 24, 2013 in terms of which the present limit for investments by FIIs
and long term investors in Government securities is USD 25 billion and for
corporate debt is USD 51 billion (including sub-limit of USD 25 billion each
for bonds of infrastructure sector and non-infrastructure sector and USD 1
billion for QFIs in non-infrastructure sector).
3. On a review,
to simplify the existing limits, it has now been decided to merge the existing
debt limits into two broad categories as under:
(i) Government
Debt limit: Government securities of USD 25 billion by merging the existing
sub-limits under Government securities [(a)USD 10 billion for investment by
FIIs in Government securities including Treasury Bills and (b) USD 15 billion
for investment In Government dated securities by FIIs and long term investors];
and
(ii) Corporate
Debt Limit: Corporate debt of USD 51 billion by merging the existing
sub-limits of Corporate debt [(a) USD 1 billion for Qualified Foreign Investors
(QFIs), (b) USD 25 billon for investment by FIIs and long term investors in
non-infrastructure sector and (c) USD 25 billion for investment by
FIIs/QFIs/long term investors in infrastructure sector].
4. A summary of
revised position is given below:
|
Instrument/s
|
Limit
|
Eligible
Investor |
Remarks
|
|
Government
securities including Treasury Bills |
USD
25 billion |
FIIs,
QFIs and Long terms investors registered with SEBI – Sovereign Wealth Funds
(SWFs), Multilateral Agencies, Pension/ Insurance/ Endowment Funds, Foreign
Central Banks. |
Eligible
Investors may invest in Treasury Bills only upto USD 5.5 billion within the
limit of USD 25 billion. |
|
Eligible
instruments as referred to in Schedule 5 of Notification No. FEMA 20 /2000-RB
dated 3rd May 2000. |
USD
51 billion |
FIIs,
QFIs, Long terms investors registered with SEBI - SWFs, Multilateral
Agencies, Pension/ Insurance/ Endowment Funds, Foreign Central Banks . |
Eligible
Investors may invest in Commercial Papers only upto USD 3.5 billion within
the limit of USD 51 billion. |
5. The
Non-Resident Indians were not subject to any limit for investment in Government
Securities as well as corporate debt. They will continue to be regulated as per
extant guidelines.
6. The above
changes will come into effect from April 1, 2013. The operational guidelines in
this regard will be issued by SEBI.
7. AD Category –
I banks may bring the contents of this circular to the notice of their
constituents and customers concerned.
8. Reserve Bank
of India has since amended the relevant Regulations vide Notification No.
FEMA.272/2013-RB dated March 26, 2013, notified vide G.S.R.No.195(E) dated
April 01, 2013.
9. 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.