Foreign Portfolio Investors (FPIs) will be able to invest an additional Rs 14,000 crore from tomorrow in various government securities, including those of the states. The cap has been now raised to Rs 2,00,500 crore from the current Rs 1,86,500 crore. The limits would be enhanced further by another Rs 13,500 crore from July 5 onwards.
This follows decisions by RBI and Sebi late last month to allow greater foreign fund flows into the government securities, which are generally favoured by FPIs over the corporate bonds in India.
FPIs can invest up to Rs 1,40,000 crore in central government debt from Rs 1,35,400 crore now, limits for long term FPIs (sovereign wealth funds, multilateral agencies, insurance funds, pension funds and foreign central banks) will be increased to Rs 50,000 crore from the existing Rs 44,100 crore.
They can also invest up to Rs 10,500 crore in state development loans from current amount of Rs 7,000 crore.
The incremental limit of Rs 5,900 crore for Long Term FPIs will be available for investment on tap with effect from tomorrow, while the separate additional limit of Rs 3,500 crore for State Development Loans (SDL) will also be available on tap.
Any limit remaining unutilised by the long-term investors at the end of a half-year would be made available as additional limit to the investors in the open category for the following half-year.
Earlier, the limit for overseas investors in securities was hiked to Rs 1,29,900 crore from October 12 last year, and it was further increased to Rs 1,35,400 crore from January 1, 2016.
Prior to the October limit, they were allowed to invest up to Rs 1,24,432 crore in government debt securities through auction.