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Easing norms for foreign ownership of government debt, the RBI on Tuesday announced higher investment limits in rupee terms in government securities by foreign portfolio investors (FPIs) with a view to bringing in an additional ₹1.2 lakh crore by March 2018.
The announcement follows a decision by the RBI to fix FPI investment limits in rupee terms and raise it in phases to reach 5 per cent of the outstanding stock by March 2018.
“The limits for FPI investment in debt securities will henceforth be announced/ fixed in rupee terms,” RBI said in a notification.
In aggregate terms, RBI said, “This is expected to open up room for an additional investment of ₹1.2 lakh crore in the limit for Central Government securities by March 2018 over and above the existing limit of ₹1.5 lakh crore for all government securities.”
For the current fiscal, RBI said it has been decided to enhance the limit for investment by FPIs in G-secs in two tranches from October 12, 2015 and January 1, 2016. The limit will be increased from ₹1.53 lakh crore to ₹1.7 lakh crore from October 12 and ₹1.86 lakh crore from January 1.
There will be a separate limit for investment by all FPIs in State development loans (SDLs), to be raised in phases to reach 2 per cent of the outstanding stock by March 2018.
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