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FII investment cap in bonds raised

FII investment cap in bonds raised

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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