RBI maintains FPI investment limits in G-Secs at 6%, corporate bonds at 15%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India (RBI) on Friday (April 26) said the limits for FPIs’ (foreign portfolio investors) investment in government securities, state development loans and corporate bonds will remain unchanged at 6%, 2% and 15%, respectively, of outstanding stocks of securities for 2024-25.

As of now, all investments by eligible investors in the ‘specified securities’ will be reckoned under the fully accessible route (FAR), the RBI said.

“The limits for FPI investment in government securities (g-secs), state government securities (SGSs) and corporate bonds shall remain unchanged at 6 per cent, 2 per cent and 15 per cent, respectively, of the outstanding stocks of securities for 2024-25,” it said. The allocation of incremental changes in the g-sec limit (in absolute terms) over the two sub-categories ‘General’ and ‘Long-term’ will be retained at 50:50 for 2024-25, the central bank stated.

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The entire increase in limits, in absolute terms, has been added to the general sub-category of state development loans (SDLs), it said.

The notification said the aggregate limit of the notional amount of credit default swaps (CDS) sold by FPIs will be 5% of the outstanding stock of corporate bonds. Accordingly, an additional limit of ₹2,54,500 crore is set out for 2024-25.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow