**Summary:**
RBI Circular RBI/2018-19/123, A.P. (DIR Series) Circular No. 19, dated February 15, 2019, addresses Authorized Dealer Category-I (AD Category-I) banks regarding Foreign Portfolio Investor (FPI) investment in debt. The circular announces the immediate withdrawal of the provision outlined in paragraph 4(f)(ii) of A.P. (DIR Series) Circular No. 31 dated June 15, 2018. The withdrawn provision restricted FPI exposure to a single corporate, including related entities, to a maximum of 20% of their corporate bond portfolio. This change, announced in the Sixth Bi-monthly Monetary Policy Statement for 2018-19 on February 7, 2019, aims to broaden access to the Indian corporate debt market for a wider range of investors. The directions within this circular are issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and do not override any other legal requirements for permissions or approvals. Contact: T. Rabi Sankar, Chief General Manager.
Key Entities Referenced
Foreign Portfolio Investors: Refers to investors investing in the Indian financial market, as mentioned in the context of debt investment.
Foreign Exchange Management Act, 1999: An Act of the Parliament of India to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
Foreign Exchange Management Transfer or Issue of Security by a Person Resident outside India Regulations, 2017: Regulations governing the transfer or issue of security by a person resident outside India.
Reserve Bank of India: Central bank of India
T. Rabi Sankar: Chief General Manager at Reserve Bank of India, signing the circular.
India: Country to which the policy is applicable
Sixth Bi monthly Monetary Policy Statement for 201819: Monetary policy statement that provides a framework for achieving the policy objectives.
RBI/2018-19/123
A.P. (DIR Series) Circular No. 19 February 15, 2019
To
All Authorised persons
Madam / Sir,
Investment by Foreign Portfolio Investors (FPI) in Debt
Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to Schedule 5 to
the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident
outside India) Regulations, 2017 notified vide Notification No. FEMA.20(R)/2017-RB dated
November 07, 2017, as amended from time to time and the relevant directions issued
thereunder.
2. In terms of paragraph 4(f) (ii) of the AP (DIR Series) Circular No. 31 dated June 15, 2018
no FPI shall have an exposure of more than 20% of its corporate bond portfolio to a single
corporate (including exposure to entities related to the corporate). As announced in
paragraph 10 of the Statement on Developmental and Regulatory Policies of the Sixth Bi-
monthly Monetary Policy Statement for 2018-19 dated February 07, 2019, in order to
encourage a wider spectrum of investors to access the Indian corporate debt market, it has
been decided to withdraw this provision with immediate effect.
3. The directions contained in this circular have been issued under sections 10(4) and 11(1)
of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to
permissions/ approvals, if any, required under any other law.
Yours faithfully
(T. Rabi Sankar)
Chief General Manager