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.