FII investment limit in corporate bonds raised to $25 billion

September 12th, 2011 - 10:13 pm ICT by IANS  

New Delhi, Sep 12 (IANS) Foreign Institutional Investors (FII) will be allowed to invest up to $25 billion in long term corporate bonds in the infrastructure sector in India, the government said Monday.

“The government in consultation with the regulators has raised the limit for FII investment in long-term corporate bonds issued by the companies in the infrastructure sector from $5 billion to $25 billion,” the finance ministry said in a statement.

As per the regulations of the Securities and Exchange Board of India (SEBI), investments under long-term corporate bonds were allowed in listed and unlisted bonds that had a minimum residual maturity of five years and these investments were subject to a minimum lock-in period of three years.

“The scheme was conceived and operationalised to open new channels of funding for the infrastructure sector while deepening the corporate bond market,” finance ministry said.

In order to make corporate bonds market attractive to the Foreign Institutional Investors, the government consultation with the Reserve Bank of India and the Securities and Exchange Board of India, has modified the scheme.

SEBI is expected to issue notifications by Oct 15 to incorporate the modifications introduced by the government.

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