Earlier in a Circular dated April 29th
2011,(Click here to view) the limit for
FII investment in non-convertible debentures / bonds issued by Indian companies
in the infrastructure sector was enhanced from USD 5 billion to USD 25 billion.
This was subject to the conditions that such instruments shall have a residual
maturity of five years and above, the investments would have a lock-in-period
of three years and ‘infrastructure’ would be as defined under the extant
External Commercial Borrowings (ECB) policy.
Later through another circular dated August 9th
2009, (Click here to view) it was decided that Qualified Foreign Investors as
defined therein (QFIs) were allowed to invest in units of Mutual Funds debt
schemes upto a limit of USD three billion within the overall limit of USD 25
billion for FII investment in non-convertible debentures / bonds issued by
Indian companies in the infrastructure sector.
RBI has vide a circular dated November 3rd
2011, had decided that:
1. FIIs
would also be allowed to invest in non-convertible debentures / bonds issued by
Non-Banking Financial Companies categorized as ‘Infrastructure Finance
Companies’(IFCs) by the Reserve Bank of India within the overall limit of USD
25 billion.
2. The
lock-in-period of three years for FII investment stands reduced to one year up
to an amount of USD 5 billion within the overall limit of USD 25 billion. This
lock-in-period shall be computed from the time of first purchase by FIIs.
3. 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.
4. The
above changes at (i) and (iii) above would also apply for QFI investment in
units of Mutual Fund debt schemes within the limit of USD three billion.
Click here to view the Circular
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