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Showing posts with label FII investments. Show all posts
Showing posts with label FII investments. Show all posts

Thursday, April 4, 2013

New norms for FII investments in govt, corporate bonds

New Delhi: The Finance Ministry has created two new sub-limits to enable foreign institutional investors (FIIs) park their funds in short-term papers of Government securities (G-secs) and corporate bonds.

In the G-sec bucket, where the overall FII investment limit is now pegged at $25 billion, the Finance Ministry has now carved out a sub-limit of $5.5 billion for foreign investment in short-term papers such as treasury bills.

Similarly, in the case of corporate bonds, a new sub-limit of $3.5 billion has been created for foreign investment in short-term papers such as commercial papers. This sub-limit has been carved out of the overall $51 billion limit for corporate bonds.

These sub-limits have been carved out based on the current holdings of such short-term instruments by FIIs and have been provided so that existing investments are not adversely affected.

The two sub-limits form part of the new investment policy for foreign investment in G-secs and corporate bonds.

Finance Minister P. Chidambaram announced the new policy on March 23 at the National Editors’ conference in the capital.

To encourage greater foreign investments in rupee-denominated debt instruments, the Government has simplified the framework of FII debt limits and also drawn a perspective plan for enhancement of these debt limits in the future. All the existing debt-limits have been merged into the two broad categories. The new approach has come into effect from April 1.