RBI on Wednesday reduced the general category foreign portfolio investors’ (FPI) investment limit in central government securities to Rs 2.34 lakh crore for the entire fiscal year 2021 as compared to the existing limit of Rs 2.46 lakh crore. As a result, the limits have been brought down by almost $1.5 billion to just above $31 billion.
With continuous selling in the central government securities by foreign portfolio investors (FPIs) due to persistent risk aversion following the COVID-19 crisis, general category FPI utilisation of investment limits in G-secs have fallen to 52.62% as on April 15 compared to the peaks of over 75% at the beginning of 2020. In the last 19 consecutive sessions, FPIs have sold Indian bonds including both G-secs and corporate bonds — worth $8.8 billion, Bloomberg data show.
At the same time, long term FPI investment limits in G-secs have been brought down to Rs 1.03 lakh crore from the prevailing limit of Rs 1.15 lakh crore, a reduction of almost $1.5 billion.
Meanwhile, the central bank has increased the general category FPI investment limits in state development loans (SDL) by Rs 3,215 crore to Rs 64,415 crore for the first half of FY21. The limits will again rise by Rs 3,215 crore to Rs 67,630 crore for the second half of FY21, the central bank notified.
“The limits for FPI investment in government securities (G-secs) and SDLs shall remain unchanged at 6% and 2%, respectively, of outstanding stocks of securities for FY20-21,” the RBI stated.