India raises FII investment limits in bonds by $5 bn

November 17th, 2011 - 8:38 pm ICT by IANS  

New Delhi, Nov 17 (IANS) India Thursday decided to increase the limit of foreign institutional investors (FIIs) investment in government securities bonds by $5 billion to $15 billion and in corporate bonds by a similar amount to $20 billion.

The enhanced total limit for FII investment in government bonds would be $15 billion from the existing limit of $10 billion and the enhanced total limit for FII investment in corporate bonds would be $20 billion from $15 billion, the finance ministry said in a statement.

In corporate bonds, the limit of $20 billion is apart from the $25 billion allowed for long-term infra bonds.

“The enhancements would increase investments in debt securities and help in further development of the government securities and the corporate bond markets in the country,” the statement said.

The finance ministry has given its approval for the decision and the market regulator, the Securities and Exchange Board of India (SEBI) is expected to issue a circular giving effect to these changes in the next few days.

Currently, FIIs can invest only up to $10 billion or Rs.43,650 crore in government securities, $15 billion or Rs.74,416 crore in corporate bonds and $25 billion or Rs.112,095 crore in corporate long term infra bonds.

“The policy has been reviewed in the context of India’s evolving macroeconomic situation, the need for enhancing capital flows and making available additional financial resources for India’s corporate sector,” the finance ministry said.

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