Sebi notifies enhanced FII investment limit

Market regulator Sebi today notified increasing the limit for foreign institutional investors (FIIs) in government securities and corporate bonds by $5 billion each and said the bidding process for the additional amount would be conducted on November 30.

The announcement by the Securities and Exchange Board of India (Sebi) comes a day after the Finance Ministry gave its nod to increase the investment limit, a move that will enhance capital flows and increase the availability of resources for Indian corporates.

FIIs can now invest up to $15 billion in government securities (G-secs) and $20 billion in corporate bonds.

"It has been decided that above incremental limits, shall be allocated to the market participants through the bidding process. The bidding of this limit shall be done on the BSE from 15:30 hrs to 17:30 hours, on November 30, 2011," Sebi said in a notification.

It said that no single entity shall be allocated more than Rs 2,000 crore of the investment limit.

"Where a single entity bids on behalf of multiple entities. Then such bid would be limited to Rs 2,000 crore for every such single entity," it said, adding that the minimum amount which can be bid for shall be Rs 1 crore.

With regard to any unutilised limit, Sebi said allocation of such limit would be made in such a way that no single entity gets more than Rs 200 crore of the investment limit.

In case a single entity bids on behalf of multiple firms, such bid would be limited to Rs 200 crore for every such single entity. Besides, the minimum amount which can be bid for shall be Rs 1 crore.

The government had taken the decision to enhance the limit of FII investment with a view to increase investment in debt securities and help in further development of the government securities and corporate bond markets in India.

The decision, which was taken after a review of the macro-economic situation is expected to enhance capital flows and make additional financial resources available to the Indian corporate sector.