Sebi hikes FPI investment limit for govt debt, corp bonds in 2 tranches

The move is part of an effort by Sebi to push inflow from overseas investors in the country's capital markets

To boost inflows of foreign funds into Indian capital markets, regulator Sebi has decided to raise the investment limit for foreign portfolio investors (FPIs) in central government securities and corporate bonds in two tranches.

It has been decided to enhance limit for investment by FPIs in two tranches from April 12 and October 1.

The move is part of an effort by Securities and Exchange Board of India (Sebi) to push inflow from overseas investors in the country's capital markets.

"Limit for FPIs in central government securities shall be enhanced to Rs 2.07 trillion on April 12 and Rs 2.23 trillion on October 1, respectively," the regulator said in a circular.

Earlier, investment limit for foreign portfolio investors (FPIs) was Rs 1.89 trillion.

Besides, limit for long-term FPIs — sovereign wealth funds, multilateral agencies, insurance funds, pension funds and foreign central banks — in central government securities has been enhanced to Rs 787 billion from yesterday. This will be further increased to Rs 923 billion on October 1. Earlier, the existing limit was Rs 441 billion for long-term FPIs.

"The sub-limit for investment by long-term FPIs in the infrastructure sector shall be done away with and the existing investment and free limits shall be merged into the corporate debt investment limits.

"Further, all the existing sub-categories under the category of corporate bonds will be discontinued and there would be a single limit for FPI investment in all types of corporate bonds," Sebi noted.

The corporate debt investment limit has been moved upwards to Rs 2.66 trillion from yesterday and the figure will be further increased to Rs 2.89 trillion from October. The existing limit was Rs 2.44 trillion.

Also, debt limit of state development loans (SDLs) has been increased to Rs 348 billion. It will further rise to Rs 381 billion. The existing limit for the category was Rs 315 billion.