The auction for allocation of available debt limits after the increase in investment ceilings will be conducted for Foreign Institutional Investors on February 20 through an electronic bidding process.
The move follows a decision by the Reserve Bank of India to enhance the limit for investment by FIIs in the long-term government debt securities by $5 billion to $15 billion and in the corporate non-infrastructure debt category to $5 billion.
The Securities and Exchange Board of India (Sebi) said in a circular that the 3-year lock-in period for the first time investments by FIIs in government securities has also been done away with.
Pursuant to the increase in investment caps, Sebi said auction will be conducted for these additional limits along with the already available limits on February 20.
The incremental limit of $5 billion (about Rs 27,000 crore) in the long-term government debt category will be auctioned along with the unutilised debt limits in this category as on January 31, 2013 (Rs 7034 crore), on February 20, 2013, taking the total available auction size to Rs 33,959 crore (over $6 billion).
Besides, the incremental limit of $5 billion in the non-infrastructure corporate bond segment would be auctioned as a separate category on February 20, 2013, Sebi said.
Collectively, investment limits worth about Rs 61,000 crore ($11.3 billion) would be auctioned on that day.
The FIIs need to bid for investment limits in an auction conducted periodically by Sebi as per the available limits, pursuant to which they can invest in the bond market.
Sebi said that the time period for utilisation of the government debt limits allocated through bidding process would be 30 days, while the time period for utilisation of the corporate debt limits would be 60 days.
Indian markets witnessed robust interest from FIIs last year and the momentum has continued so far. FIIs have pumped in $785 million (Rs 4,196 crore) this year, after putting in $6.64 billion (Rs 34,988 crore) in the debt securities during 2012.
That was the highest annual net investment by FIIs in debt securities since 2010, when they had infused Rs 46,408 crore.