FIIs get nod to buy $10 bn more of bonds; limit on tenure eased
In government bonds, the enhanced limit has been added to the sub-limit of $10 billion, where FIIs are allowed to invest only in long-term government bonds with a residual maturity of at least three years. However, this has now been liberalised to a residual maturity of at least one year.
The enhancement of $5 billion in corporate bonds will not be available to buy certificates of deposit or commercial papers, the RBI said.
The investment sub-limit for infrastructure bonds has been kept unchanged but the restriction of the lock-in period for 1 year has been removed. FIIs will have to continue to invest in infrastructure bonds with a residual maturity of 15 months and above, the central bank said.
“The three-year residual maturity requirement for investments by qualified financial investors within the $3 billion limit has been modified to three years’ original maturity,” the RBI said.
Incremental inflows by FIIs into Indian debt so far this month has been negligible even though FIIs had bid aggressively at the auction of limits. Provisional data from the Securities and Exchange Board of India show FIIs invested only $200 million in bonds so
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