The Reserve Bank of India (RBI) has simplified investment norms for foreign investors in the bond market.
Earlier, there was a restriction that foreign investors can invest a maximum of $10 billion in treasury bills. Now, the central bank prescribed a overall cap of $25 billion on investment in government bonds, including both long- and short-term debt including treasury bills.
According to a recent notification by the RBI, the debt limit available for overseas investors has been merged into two broad categories—government debt and corporate debt.
The cap on corporate bonds remains at the current level of $51 billion, but separate limits on different types of investors and corporates such as infrastructure have been removed.
The central bank implemented these changes from Apri 1l. The RBI notification comes about a week after the finance minister said the restrictions on foreign institutional investors in debt will be eased to attract inflows and help fund a widening current account deficit.
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