NSE to auction FII limits for Rs 3,161 cr govt debt tomorrow

Unutilised debt investment limits for foreign investors need to be auctioned on an exchange platform when the aggregate reaches or breaches 90% of the limit.

As foreign investors remain bullish on Indian markets, top bourse NSE will tomorrow auction investment limits for them in government debt securities worth Rs 3,161 crore.

The aggregate overseas investment in these securities has reached Rs 1,21,271 crore - 97.46 per cent of total permitted limit of Rs 1,24,432 crore - as on November 28.

As per the guidelines of capital markets regulator Sebi, unutilised debt investment limits for foreign investors need to be auctioned on an exchange platform when the aggregate reaches or breaches 90 per cent of the limit.

The aggregate limit includes that of Foreign Institutional Investors, Foreign Portfolio Investors and Qualified Institutional Investors.

Accordingly, live bidding for auction of the currently unutilised debt investment limits worth Rs 3,161 crore would be conducted on National Stock Exchange's e-Bid platform on December 1.

The last such auction was conducted on BSE's EbidXchange platform on November 10, when debt securities worth Rs 1,488 crore were over-subscribed by nearly four times, receiving bids worth Rs 5,664 crore. A total of 83 bids were received, out of which 28 were declared successful.

Almost all such auctions have received robust response in the recent times and have got over-subscribed by multiple times, reflecting a huge demand among foreign investors for government debt securities in the Indian markets.

As per the current norms, foreign investors are allowed to invest up to $25 billion (Rs 1,24,432 crore) in government debt securities through auction route, while the cap currently stands at $5 billion (Rs 29,137 crore) for government debt bonds through 'on tap' route.

While the limit in the first category has been exhausted by over 97 per cent, the second category is also already used up by nearly 84 per cent.

Foreign investors are allowed to pump in a further $5.5 billion in treasury bills, out of which nearly 14 per cent is used as of now.

In corporate debt, the upper cap currently stands at $51 billion and nearly 57 per cent of this limit has been exhausted by the foreign investors.

The overall investment cap for debt securities stands at $81 billion (Rs 3,97,892 crore), which also includes $2 billion for commercial papers and $5 billion for credit enhanced bonds.

Of this overall limit, the total investments and limits acquired by foreign investors currently stands at Rs 2,83,984 crore which is over 71 per cent of the permitted limits.