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RBI raises investment limit for FPIs in government, corporate bonds
Jan-24-2020

With a view to bring in more foreign funds in the country, the Reserve Bank of India (RBI) has raised the investment limit for foreign portfolio investors (FPIs) in government and corporate bonds. According to the current norms, short-term investments by a foreign portfolio investor (FPI) should not exceed 20 per cent of the total investment of that FPI in either central government securities (including treasury bills) or state development loans. The same norms are applicable on investments in corporate bonds.

The RBI said that the short-term investment limit has now been increased from 20 percent to 30 percent in both the cases. Meanwhile, it has also made relaxation in the voluntary retention route (VRR) for FPI investments in debt. The investment cap through VRR has been doubled to Rs 1.5 lakh crore. 

It said FPIs that have been allotted investment limits under VRR may, at their discretion, transfer their investments made under the general investment limit to VRR. It added FPIs are also allowed to invest in exchange-traded funds that invest only in debt instruments.

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