Starting April 4, Foreign Portfolio Investors (FPIs) will be allowed to buy Central government securities worth ₹1.9 lakh crore up from the existing cap of ₹1.795 lakh crore, according to an RBI notification.
This follows the medium-term framework announced by the Centre, allowing FPI investment limits to be increased in a phased manner.
FPI limits in Central G-Secs for FPIs has been increased from ₹1.354 lakh crore to ₹1.4 lakh crore. For long-term FPIs, the additional limits of ₹44,100 crore has been revised to ₹50,000 crore. Investment in state development loans also will go up from ₹7,000 crore to ₹10,500 crore.
Effective July 5, these limits would be further increased to ₹2.14 lakh crore overall, ₹1.44 lakh crore for Central G-Secs, ₹56,000 crore for long-term FPIs and ₹14,000 crore for State development loans. Any limit remaining unutilised by long-term investors at the end of a half-year would be made available as additional limit to investors in the open category for the following half-year. Accordingly, the limits for long-term investors remaining unutilised at the end of half year ending September 30, 2016, will be released for investment under the open category in October the RBI added.
All other existing conditions, including the security-wise limits, investment of coupons being permitted outside the limits and investments being restricted to securities with a minimum residual maturity of three years, will continue to apply.
Further, operational guidelines relating to allocation and monitoring of limits will be issued by SEBI, the RBI added.