Debt allocation mechanism for FIIs eased

Once the relaxation is in place, FIIs and sub-accounts can re-invest 50% of their debt holdings from the previous calendar year to the succeeding calender year. Sub-accounts are the entities that include foreign companies, foreign individuals and institutions, funds or portfolios established outside India, on whose behalf FIIs propose to make investments in India.

“With a view to provide operational flexibility, beginning January 1, 2014, it has been decided that FIIs/sub-accounts can reinvest during each calender year to the extent of 50% of their debt holding at the end of previous calender year,” Sebi said in a circular.

For investing in the bond market, FIIs have to acquire limits that are auctioned by Sebi every month. The regulator has also reduced the utilisation period for government securities and corporate debt limits, allocated through a bidding process, to 30 days and 60 days, respectively.

Earlier, FIIs were given 45 days to use their government securities limits and 90 days to use their corporate debt limits. This would be applicable for both old-and long-term infrastructure limits.

Further, Sebi has relaxed the investment limits for FIIs regarding corporate debt in the long-term infrastructure category. “It has been decided that FII may avail limits in the corporate debt long-term infra category without obtaining Sebi approval till the overall FII investments reaches

... contd.