India raises overseas investment limit in government, corporate bonds (Lead)June 25th, 2012 - 5:10 pm ICT by IANS
Mumbai, June 25 (IANS) In a bid to prop up the battered currency, the Reserve Bank of India (RBI) Monday hiked the limit of overseas investments in government and corporate bonds and announced a slew of other measures to improve market sentiments. The limit of overseas investment in government bonds has been raised by $5 billion to $20 billion and that of external commercial borrowings to $10 billion.
The measures are aimed at attracting more foreign investments that would help revive the battered currency, which hit a record low of 57.33 to the dollar last week.
The Reserve Bank of India said in a statement that it has taken measures in consultation with the government of India.
Finance Minister Pranab Mukherjee had said earlier in the day that Economic Affairs Secretary R. Gopalan was in talks with the RBI for coordinated steps to bolster economic growth and revive the currency.
It has been decided to allow Indian companies in the manufacturing and infrastructure sector with foreign exchange earnings to avail of external commercial borrowing (ECB) for repayment of outstanding rupee loans towards capital expenditure and/or fresh rupee capital expenditure under the approval route, the RBI said.
“The overall ceiling for such ECBs would be $10 billion,” the central bank said.
The existing limit for investment by Securities and Exchange Board of India (SEBI) registered foreign institutional investors (FIIs) in government securities (G-Secs) has been enhanced by a further amount of $5 billion.
This would take the overall limit for FII investment in G-Secs from $15 billion to $20 billion.
“In order to broad base the non-resident investor base for G-Secs, it has also been decided to allow long term investors like Sovereign Wealth Funds (SWFs), multilateral agencies, endowment funds, insurance funds, pension funds and foreign central banks to be registered with SEBI, to also invest in G-Secs for the entire limit of $20 billion,” the RBI said.
The sub-limit of $10 billion (existing $5 billion with residual maturity of 5 years and additional limit of $5 billion) would have the residual maturity of three years.
The RBI said Qualified Foreign Investors (QFIs) can now invest in those mutual fund schemes that hold at least 25 percent of their assets, either in debt or in equity or both, in infrastructure sector under the current $3 billion sub-limit for investment in mutual funds related to infrastructure.
- RBI announces steps to revive rupee - Jun 25, 2012
- India raises overseas investment limit in government bonds (Roundup) - Jun 25, 2012
- FII investment limit in corporate bonds raised to $25 billion - Sep 12, 2011
- FII investment cap in infrastructure raised - Feb 28, 2011
- Foreign Direct Investment in India to be more user friendly - Feb 28, 2011
- RBI measures fail to cheer market, Sensex slips 90 points (Roundup) - Jun 25, 2012
- India cuts tax on overseas borrowings (Lead) - Sep 21, 2012
- FII investment raised in government and corporate securities - Sep 23, 2010
- RBI to notify proposal allowing airlines to access foreign funds - Apr 19, 2012
- India allows foreigners to invest in domestic mutual funds - Aug 09, 2011
- India's forex reserves grow by $1.36 bn - Jul 07, 2012
- Overcome hurdles to up investment in infrastructure: FICCI - Sep 11, 2011
- 'Qualified foreign investors can directly invest in equity markets' - Jan 01, 2012
- Reliance Communications gets RBI nod for refinancing FCCBs - Feb 16, 2012
- India raises FII investment limits in bonds by $5 bn - Nov 17, 2011