RBI hikes FII limit in govt securities, corp bond by $5b

Tags: News
The Reserve Bank today hiked FII investment limits in government securities and corporate bonds by $ 5 billion each, taking the total cap in domestic debt to $ 75 billion, with a view to bridging the current account deficit.

Further liberalising the norms, the three-year lock-in period for foreign institutional investors (FIIs) purchasing government securities (G-Secs) for the first time has been done away with, RBI said.

The sub-limit of $ 10 billion for investment by FIIs and long-term investors in G-Secs stands enhanced by $ 5 billion, it said.

The limit in corporate debt, other than infrastructure sector, stands enhanced from $ 20 billion to $ 25 billion, RBI said.

With increase of $ 5 billion in each of the two categories, FIIs and long-term investors can now invest $ 25 billion in G-Secs and $ 50 billion in corporate debt instruments, taking the total to $ 75 billion.

The earlier FII investment limit in G-Secs was $ 20 billion and for corporate debt it was $ 45 billion, including sub-limit of $ 25 billion for infra bonds.

RBI further said: "Residual maturity condition shall not be applicable for the entire sub-limit (in GSecs)of $ 15 billion but such investments will not be allowed in short-term paper like Treasury Bills, as hitherto".

The overall FII limit of domestic debt is distributed through a host of categories across government, corporate and infrastructure debt.

Long-term investors include sovereign wealth funds, multilateral agencies, pension funds and foreign central banks.

Government, which is battling a high current account deficit (CAD) -- the gap between inflows and outflows of foreign funds -- is trying to attract more foreign funds into the country.

The CAD touched a record high of 5.4 per cent in the July-September quarter of the current fiscal.

In order to check outflow of foreign currency, the government recently hiked import duty on gold and also took steps to encourage mutual funds park their gold in deposit schemes offered by banks.

As a measure of further relaxation, the RBI added that it has dispensed with the one year lock-in period on holding infrastructure bonds.


  • Modi must clearly say that preservation of cows is not about manslaughter

    Instead of in-fighting between hindus and muslims, India should fight poverty and maintain its values of diversity and tolerance, as advised by Presid


Stay informed on our latest news!


Sarthak Raychaudhuri

vice-president, HR, Asia South Whirlpool of India

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs


Urs Schoettli

America lacks will to contain China

Recently both the Chinese leader Xi Jinping and Indian prime ...

Zehra Naqvi

Exercise gets creative juices flowing

Ever known that feeling of being sluggish and drowsy, of ...

Bubbles Sabharwal

You are what you believe yourself to be

The Gita says a man is what his shraddha is. ...


William D. Green

Chairman & CEO, Accenture