FII investment limit in G-secs raised by $5 bn

The Reserve Bank on Wednesday said the FII limit for investment in government securities has been increased by USD 5 billion within the total cap of USD 30 billion.

The Reserve Bank on Wednesday said the FII limit for investment in government securities has been increased by $ 5 billion within the total cap of $ 30 billion.

The central bank said the limit has been enhanced by reducing the investment limit for long term investors from $ 10 billion to $ 5 billion.

"It has been decided to enhance the investment limit in Government securities available to FIIs (Foreign Institutional Investors)/QFIs (Qualified Foreign Investor)/FPIs (Foreign Portfolio Investors) by $ 5 billion by correspondingly reducing the amount available to long-term investor from $ 10 billion to $ 5 billion within the overall limit of $ 30 billion," an RBI notification said.

Long-term investors include sovereign wealth funds (SWFs), multilateral agencies, pension, insurance funds and foreign central banks registered with Sebi.

Earlier this year, the limit for long-term investors for investment in government securities was raised from $ 5 billion to $ 10 billion within the total limit of $ 30 billion available to them.

The RBI, however, said the increment investment limit of $ 5 billion shall be required to be put in government bonds with a minimum residual maturity of three years.

It further said all future investment against the limit vacated, when the current investment by an FII/QFI/FPI runs off either through sale or redemption shall, also be required to be made in Government bonds with a minimum residual maturity of three years.

"There will be no lock-in period and FIIs/QFIs/FPIs shall be free to sell the securities to the domestic investors," the notification said.