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Foreign Portfolio Investors (FPI) will be offered an additional investment limit of ₹1,20,000 crore in Government securities in a phased manner by March 2018. As on date, the FPI limit for G-Sec investments is ₹1,53,500 crore.
Foreign portfolio investments will be denominated in rupees instead of dollars and the cap will be raised in phases to 5 per cent of outstanding debt by March, 2018, the RBI said.
The RBI plans to issue a circular outlining details of the medium term framework separately.
The framework seeks to have a more predictable regime for FPI investment in India.
Meeting a long pending demand of state governments, the RBI also unveiled separate investments limits for FPIs in state development loans (SDL) in a phased manner (at two per cent of outstanding stock) unlocking an additional limit of about ₹50,000 crore by March 2018.
Each tranche would entail an increase in limits to the extent of ₹13,000 crore for G-sec (₹7,500 crore for long-term investors and ₹5,500 crore for others) and ₹3,500 crore for SDL which will be open to all investors.
The increase in limits will be announced every half year in March and September and released every quarter. However, for the current fiscal, limits would be increased in two tranches — October 12, 2015 and January 1, 2016.
The existing requirement of investments being made in G-sec (including SDLs) with a minimum residual maturity of three years stays.
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