Foreign investors can invest in IDFs, says RBI

The Reserve Bank of India (RBI) has allowed foreign investors to invest in debt instruments floated by infrastructure debt funds (IDF) set up as non-banking financial companies (NBFCs) or mutual funds (MFs). The debt instrument would include foreign currency and rupee bonds.

While both individual and institutional foreign investors are allowed to invest, the regulator has specified the instruments they are eligible to invest in. Eligible foreign investors include high net worth individuals registered with the Securities and Exchange Board of India (Sebi) and high net worth individuals registered with Sebi as sub-accounts of Sebi-registered foreign institutional investors (FIIs). Non-residents who fall under foreign exchange management regulations, 2000, are also eligible to invest.

Institutional investors eligible for investment in instruments issued by IDFs include sovereign wealth funds, multilateral agencies, pension funds, insurance and endowment funds and FIIs registered with Sebi. Investments by non-residents in foreign currency and rupee bonds issued by IDFs would be capped at $10 billion. The limit of $10 billion is within the $25-billion cap for investment by FIIs in the infrastructure sector. No cap is set for non-resident Indians for investment in rupee bonds issued by IDFs.