The ceiling on investment by foreign institutional investors (FII) in government bonds and corporate bonds has been raised by $5 billion each.
The sub-limit of $10 billion for investment by FIIs in G-secs was enhanced by $5 billion, Reserve Bank of India ( RBI) said. The cap on corporate debt other than in the infrastructure sector was raised from $20 billion to $25 billion.
With rises of $5 billion in each of the two categories, FIIs and long-term investors can now invest $25 billion in G-secs and $50 billion in corporate debt instruments, including the sub-limit of $25 billion for infra bonds.
The move is aimed at attracting foreign funds into the bond market and thereby tackle the high current account deficit, which stood at a record 5.4 per cent of the gross domestic product in the quarter ended September.
The three-year lock-in period for FIIs purchasing government securities (G-secs) for the first time has been done away with, RBI said.
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