Finance Ministry increased Investment Limit for FII in G-secs & Corporate Bonds by $5 billion Each

The Finance Ministry on 17 November 2011 increased the investment limit for foreign institutional investors (FII) in government securities (G-secs) and corporate bonds by $5 billion each.  The Ministry’s move will enhance capital flows and increase the availability of resources for corporates. The FIIs can now invest up to $15 billion in G-secs and $20 billion in corporate bonds.

The investment limit in long-term infrastructure bonds, however was kept unchanged at $25 billion. A notification informing about the new FII investment ceilings was issued by the Securities and Exchange Board of India.
The enhancement is expected to increase investment in debt securities and help in further development of the government securities and corporate bond markets in the country. The decision was taken after a review of the macro—economic situation.

the increase in investment limits became necessary as little space was available for further FII investment in G-secs and corporate bonds. As against the FII investment ceiling of Rs.43650 crore in G-secs, foreign institutions had invested Rs.41,253 crore as of 31 October 2011.

In the case of corporate bonds, FIIs invested Rs.68289 crore as of 31 October 2011 as against the ceiling of Rs.74416 crore.