RBI allows FPIs to invest in treasury bills

Easing foreign investment rules, the Reserve Bank today permitted FPIs to invest in treasury bills issued by the central government.

However, the foreign portfolio investors (FPIs) will have to ensure that their exposure in government securities as well as corporate bonds of less than one year maturity will remain below 20 per cent.

In a notification, the RBI also asked the FPIs to bring down their total exposure in debt instruments (G-secs, state development loans or, corporate bonds) with one-year maturity to below 20 per cent within six months.

"FPIs are permitted to invest in treasury bills issued by the Central Government," the RBI said while issuing clarification on recent changes in investment norms for FPIs.

It further said that the implementation date of online monitoring of utilisation of G-sec limits has been set as June 1, 2018.

The requirement that investment in securities of any category with residual maturity below one year should not exceed 20 per cent of total investment by an FPI in that category applies, on a continuous basis, said the notification in this regard.

At any point in time, it added that all securities with residual maturity of less than one year will be reckoned for the 20 per cent limit, regardless of the maturity of the security at the time of purchase by the FPI.

"In case investments in securities with less than one year residual maturity, as on 02 May 2018 (beginning of day), is more than 20 per cent of total investment in any category, the FPI shall bring such share below 20 per cent within a period of six months...," the RBI said.

Further, the FPI should ensure that no further additions are made to the portfolio of securities with residual maturity of less than one year as on 02 May, 2018, it said.

The directions will be applicable with immediate effect.