FII limit in domestic debt raised by $10 bn

Move to attract long-term investments into the debt market

To attract long-term investments into the debt market and to narrow the current account deficit, the finance ministry today raised the foreign institutional investor (FII) limits in government securities and corporate bonds by $5 billion (Rs 27,600 crore) each.

The additional $10 billion would raise the total FII investment limit allowed in a year in domestic debt to $75 billion (Rs 4.14 lakh crore).

The high-level committee on external commercial borrowing, headed by economic affairs secretary Arvind Mayaram, took the decision, to encourage long-term foreign funds into the Indian debt market.

According to ministry officials, the $5-billion window in government securities would be without any stipulated residual maturity. It would be open to pension funds, central banks and sovereign wealth funds. The other $5-billion segment would be open for corporate bonds.

This overall limit of $75 billion in domestic debt is distributed through a host of categories across government, corporate and infrastructure debt. The guidelines in this regard would be notified in a week to 10 days by the Reserve Bank of India.