Sebi lowers FII investment cap in govt, corporate debt

With the debt market attracting foreign institutional investors (FII) in droves, market regulator the Securities and Exchange Board of India (Sebi) today drastically reduced the amount that a single such entity can invest in government and corporate papers.

According to a circular issued today, the Sebi has lowered the ceiling on investment by a single FII in government debt to Rs 100 crore from Rs 10,000 crore earlier.

Similarly, the minimum amount of government debt which an FII can bid for has been reduced to Rs 50 crore from Rs 250 crore previously.

The minimum tick size, or amount paid in a single tranche, for government debt has also been slashed to Rs 50 crore for FIIs from the originally applicable Rs 100 crore, the regulator said.

Certain changes have also been made in the investment limit for a single FII in corporate debt.

No single FII can be allocated more than Rs 1,000 crore of corporate debt under the amended clauses. The investment limit was earlier Rs 10,000 crore.

The minimum amount which can be bid for corporate debt has also been reduced to Rs 50 crore from Rs 250 crore in the original circular.

The minimum tick size has also been halved to Rs 50 crore from Rs 100 crore, it said.

India has received debt investment from FIIs to the tune of Rs 37,998.30 crore during 2010 till today.

The bidding for these two papers will next be done on August 12.