SEBI hiked FPI investment limit for government debt

Markets regulator, the Securities and Exchange Board of India (SEBI) on 29 March 2016 decided to increase the Foreign Portfolio Investors (FPI) investment limit in Central Government securities. This will boost inflows of foreign funds into Indian capital markets.

The limit was increased to 140000 crore rupees from 135400 crore rupees and will be effective from 4 April 2016. It will be further increased to 144000 crore rupees from 5 July 2016.

Main Highlights

There will be a separate limit for investment by all FPIs in the state development loans.

• The limit for long term FPIs (Sovereign Wealth Funds, Multilateral Agencies, Endowment Funds, Insurance Funds, Pension Funds and Foreign Central Banks) in the Central Government securities will be enhanced to 50000 crore rupees from 4 April 2016 and 56000 crore rupees on 5 July 2016. Currently, the existing limit is 44100 crore rupees for long term FPIs.

• The limit for investment by all FPIs in State Development Loans (SDL) was enhanced to 10500 crore rupees on 4 April 2016 and 14000 crore rupees on 5 July 2016 respectively from the existing limit of 7000 crore rupees.  

• For long term FPIs the incremental limits were raised to 5900 crore rupees on 4 April 2016 and 6000 crore rupees on 5 July 2016.

• The incremental limits of 3500 crore rupees each for investment by FPIs in SDLs shall be available for investment on tap with effect from 4 April 2016 and 5 July 2016 respectively.

• Keeping in view the extent of utilisation of the limits for Central Government securities by long term and other investors, SEBI decided that from 1 October 2016, any unutilised limit within the Government debt limit for Long Term FPIs, at the end of the half-year, shall be made available for investment as additional limit to all categories of FPIs for the subsequent half-year.

The decision issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 came into effect immediately.

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