RBI hikes FII investment limit in infrabonds to $25 billion

The Reserve Bank of India (RBI) today announced an increase in the investment limit for foreign institutional investors (FIIs) in bonds and debentures of Indian infrastructure companies from $5 billion to $25 billion.

FIIs registered with the Securities and Exchange Board of India (SEBI) may also invest in non-convertible debentures and bonds issued by non-banking financial companies categorised as 'infrastructure finance companies' within the overall limit of $25 billion, RBI said in a notification.

The lock-in-period of three years for FII investment has also been reduced to one year for amounts up to $5 billion within the overall limit of $25 billion. The lock-in-period will be computed from the time of first purchase by FIIs.

The residual maturity of five years and above stipulated would now onwards refer to the original maturity of the instrument at the time of first purchase by an FII.

The above changes would also apply for QFI investment in units of Mutual Fund debt schemes within the limit of $3 billion.

RBI said it will separately issue necessary amendments to the Foreign Exchange Management (Transfer of Issue of Security by a Person Resident outside India) Regulations, 2000.