Reserve Bank raises FII limit in govt, corp bonds by $5 bn each

Reserve Bank of India raises foreign institutional investors (FII) limit in govt, corp bonds by $5 bn each.

To attract foreign funds and foreign institution into the bond market, the Reserve Bank of India ( RBI) on Thursday raised the ceiling for foreign institutional investors (FII)’s holdings in government securities and corporate bonds by $5 billion each. The cap on domestic debt now stands at $75 billion.

Bond dealers and treasury executives said the interest of FIIs had been robust. The additional capital flows would help tackle the high current account deficit, which stood at a record 5.4 per cent of the gross domestic product in the quarter ended September.

STEPS TO AID INFLOWS

  • Sub-limit for FII investment in G-secs raised from $10 billion to $15 billion
  • Cap on corporate debt (excluding infra) raised from $20 billion to $25 billion
  • Three-year lock-in for FIIs purchasing G-secs done away with
  • The cap on domestic debt now stands at $75 billion.
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RBI Reserve Bank of India

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