RBI notifies simplification of foreign investment norms in debt

The Reserve Bank of India (RBI) on Monday said that the debt limit available for foreign investors has been merged into two broad categories—government debt and corporate debt.

Foreign investors can invest up to $25 billion in government bonds including both long-term and short-term debt papers such as Treasury-bills (T-bills).

Earlier there had been investment restrictions on T-bills of up to $10 billion.

“FIIs will move towards the shorter end of the curve because earlier there were restrictions and they could not go to the shorter-end. These FIIs were reluctant to go to the longer-end. Now bulk of the flows will be at the shorter end,” said Mohan Shenoi, president—group treasury and global markets, Kotak Mahindra Bank.

The limit on corporate bonds remains at the current level of $51 billion.

However separate limits on different types of investors and corporates such as infrastructure has been removed.