FPIs can invest in govt bonds of 1yr tenure under $5-bn limit

Market regulator Sebi today said long -term FPIs such as sovereign wealth and foreign central bank can invest in government bonds having a minimum residual maturity of one year within USD 5 billion category.
"...All investments by long-term FPIs (sovereign wealth funds, multilateral agencies, endowment funds, insurance and pension funds and foreign central banks) in the USD 5 billion government debt limit shall continue to be made in government bonds having a minimum residual maturity of one year," Sebi said in a circular.
The Securities and Exchange Board of India (Sebi), in July, had tweaked the investment limits for Foreign Portfolio Investors (FPIs) in government securities by increasing the threshold for general investors from USD 20 billion to USD 25 billion.

At the same time, it has reduced sub-limit for longer time FPIs such as sovereign funds by USD 5 billion as there was less demand in this category. The overall cap remain unchanged at USD 30 billion.
The previous cap of USD 10 billion had been utilised by only about 20 per cent in this category. The USD 20 billion limit for general FPIs has been always fully exhausted.
FPIs are allowed to invest in the USD 25 billion government debt limit till the overall investment reaches 90 per cent after which the auction mechanism can be initiated for allocation of the remaining limits.

The debt auction quotas give overseas investors the right to invest in debt up to the limit purchased.
Earlier this year, the limit for long-term investors for investment in government securities was raised from USD 5 billion to USD 10 billion within the total limit of USD 30 billion available to them.