Limit of 20% for Single Corporate in FPI Debt Portfolio Withdrawn

[A.P. (DIR Series) Circular No. 19 dated February 15, 2019]

Investment by Foreign Portfolio Investors (FPI) in Debt

Attention of Authorised 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, 2017 notified vide Notification No. FEMA.20(R)/2017-RB dated November 07, 2017, as amended from time to time and the relevant directions issued thereunder.

2. In terms of paragraph 4(f) (ii) of the  AP (DIR Series) Circular No. 31 dated June 15, 2018 no FPI shall have an exposure of more than 20% of its corporate bond portfolio to a single corporate  (including  exposure  to  entities  related  to  the  corporate).  As  announced  in paragraph 10 of the  Statement on Developmental and Regulatory Policies of the  Sixth Bi- monthly Monetary Policy Statement for 2018-19 dated February 07, 2019,   in order to encourage a wider spectrum of investors to access the Indian corporate debt market, it has been decided to withdraw this provision with immediate effect.

3. 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.