FIIs can't buy G-secs with maturity of less than 1 year: Sebi

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Capital market regulator Sebi today restricted foreign investors from buying government securities having maturity of less than one year, a move that aims at encouraging inflows of long-term overseas fund.

"FIIs (Foreign Institutional Investors)/QFIs (Qualified Foreign Investors) shall henceforth be permitted to invest only in dated government securities having residual maturity of one year or above," Sebi said in a circular.

Securities and Exchange Board of India added that the "existing FII/QFI investments in Treasury Bills shall be allowed to taper off on maturity/sale".

The regulator also said that "the purchases in Treasury Bills shall be permitted" and "the investment limits vacated at the shorter end would be available at longer maturities".

However, the overall limit for FII/QFI investments in government securities would remain unchanged at $ 30 billion, it said.

The circular by Sebi has been issued pursuant to the announcements made in the first bi-monthly monetary policy statement, 2014-15 on April 1, 2014 by the Reserve Bank.

RBI has been rationalising and expanding limits for foreign investments in debt markets.


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