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Looking to increase fund flows from overseas investors, the Securities and Exchange Board of India (Sebi) on Thursday allowed Foreign Portfolio Investors (FPIs) to invest their coupons received on investments in government securities back into such bonds.
These investments would be allowed even after FPIs have fully utilised the applicable limits of $30 billion, Sebi said in a circular.
The changes have been made by Sebi in its FPI guidelines following a decision taken in this regard by the Reserve Bank of India (RBI) earlier this week during its monetary policy review.
"Pursuant to the announcements made in the Sixth Bi-monthly Monetary Policy Statement, 2014-15, dated February 3, 2015 by the RBI, it has been decided that investment of coupons in Government securities will be enabled even when the existing limits for FPIs are fully utilised," Sebi said in a circular.
A coupon on a bond is a periodic interest payment that an investor recieves during the life of the security.
The amendments would come into effect immediately, and the same has notified by the RBI on Thursday as well.
