FIIs can offer G-secs, corporate bonds as collateral in futures and options segment

The Reserve Bank of India today allowed foreign institutional investors to offer their investments in government securities and corporate bonds as collateral to stock exchanges for derivatives transactions.

However, in the cash segment, FIIs can use their investment in corporate bonds as collateral other than already permitted collaterals.

"On a review, it has been decided in consultation with the Government of India and the Securities and Exchange Board of India (SEBI), to permit FIIs to use, in addition to already permitted collaterals, their investments in corporate bonds as collateral in the cash segment and government securities and corporate bonds as collaterals in the F&O (futures and options) segment," RBI said in a notification.

The operational guidelines in this regard will be issued separately by SEBI, it said.

With the proposed changes coming into effect, FIIs will be eligible to offer government securities/corporate bonds acquired by FIIs cash and foreign sovereign securities with AAA ratings in both cash and F&O segments, it said.