This Reserve Bank of India (RBI) circular (A.P. DIR Series Circular No. 05, dated May 31, 2021) addresses investment limits for Foreign Portfolio Investors (FPI) in Government Securities (G-secs) under the Medium Term Framework (MTF). The circular pertains to Authorized Dealer Category-I (AD Category-I) banks and references Foreign Exchange Management (Debt Instruments) Regulations, 2019, as well as several previous RBI circulars related to this topic.
Key provisions of the circular are as follows:
* **Investment Limits Unchanged (as percentages):** The limits for FPI investment in G-secs and State Development Loans (SDLs) remain at 6% and 2%, respectively, of outstanding stocks for FY 2021-22.
* **Fully Accessible Route (FAR):** All eligible investments continue to be reckoned under the Fully Accessible Route (FAR).
* **Allocation of Incremental Changes:** The allocation of incremental changes in the G-sec limit is retained at 50:50 for the "General" and "Long-term" sub-categories for FY 2021-22.
* **SDL Limit Increase:** The entire increase in limits for SDLs has been added to the "General" sub-category of SDLs.
* **Revised Limits (Absolute Terms):** The circular provides a table outlining the revised investment limits in absolute terms (Crore) for various categories, including G-secs (General and Long-Term), SDLs (General and Long-Term) and Corporate Bonds. The table includes current FPI limits as on March 31, 2021, revised limits for HY Apr 2021-Sept 2021 and revised limit for the HY Oct 2021-Mar 2022.
* GSec General: 2,34,531 (Current), 2,43,914 (Apr-Sept 2021), 2,53,298 (Oct 2021-Mar 2022)
* GSec Long Term: 1,03,531 (Current), 1,12,914 (Apr-Sept 2021), 1,22,298 (Oct 2021-Mar 2022)
* SDL General: 67,630 (Current), 76,766 (Apr-Sept 2021), 85,902 (Oct 2021-Mar 2022)
* SDL Long Term: 7,100 (Current), 7,100 (Apr-Sept 2021), 7,100 (Oct 2021-Mar 2022)
* Corporate Bonds: 5,41,488 (Current), 5,74,263 (Apr-Sept 2021), 6,07,039 (Oct 2021-Mar 2022)
* Total Debt: 9,54,280 (Current), 10,14,957 (Apr-Sept 2021), 10,75,637 (Oct 2021-Mar 2022)
AD Category I banks are instructed to bring the circular's contents to the attention of their constituents and customers. The circular is issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999.
For further information, contact the Chief General Manager, Financial Markets Regulation Department, Reserve Bank of India, Central Office Building, 9th Floor, Shahid Bhagat Singh Marg, Fort, Mumbai – 400001. Tel: 91-22-2260 1000, Fax: 91-22-2270-2290, email: cgmfmrdrbi.org.in.
Key Entities Referenced
Foreign Portfolio Investors: Refers to investors investing in financial assets of a country.
Government Securities: Debt instruments issued by a government to support government spending.
Medium Term Framework: A framework related to investment in government securities by Foreign Portfolio Investors.
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.
State Development Loans: Debt instruments issued by state governments to finance their developmental activities.
Fully Accessible Route: A route that allows eligible investors to invest in specified securities.
Mumbai, Maharashtra: A city in India where Financial Markets Regulation Department, Central Office Building is located.
Dimple Bhandia: Chief General Manager at Reserve Bank of India.
RESERVE BANK OF INDIA
www.rbi.org.in
RBI/2021-22/44
A.P. (DIR Series) Circular No. 05 May 31, 2021
To,
All Authorized Persons
Madam / Sir
Investment by Foreign Portfolio Investors (FPI) in Government Securities: Medium
Term Framework (MTF)
Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to Schedule 1 to
the Foreign Exchange Management (Debt Instruments) Regulations, 2019 notified, vide
Notification No. FEMA. 396/2019-RB dated October 17, 2019, as amended from time to time
and the relevant directions issued thereunder.
2. A reference is also invited to the following directions issued by the Reserve Bank:
a) A.P. (DIR Series) Circular No. 25 dated March 30, 2020;
b) Circular No. FMRD.FMSD.No.25/14.01.006/2019-20 dated March 30, 2020;
c) A.P. (DIR Series) Circular No. 30 dated April 15, 2020; and
d) A.P. (DIR Series) Circular No. 14 dated March 31, 2021.
3. Investment Limits for FY 2021-22
a. The limits for FPI investment in Government securities (G-secs) and State
Development Loans (SDLs) shall remain unchanged at 6% and 2% respectively, of
outstanding stocks of securities for FY 2021-22.
b. As hitherto, all investments by eligible investors in the ‘specified securities’ shall be
reckoned under the Fully Accessible Route (FAR) in terms of A.P. (DIR Series) Circular
No. 25 dated March 30, 2020.
c. The allocation of incremental changes in the G-sec limit (in absolute terms) over the
two sub-categories – ‘General’ and ‘Long-term’ – shall be retained at 50:50 for FY
2021-22.
d. The entire increase in limits for SDLs (in absolute terms) has been added to the
‘General’ sub-category of SDLs.
िव�ीय बाज़ार िविनयमन िवभाग,क��ीय कायार्लयभवन, नौव�मंिजलशहीद भगत �सहं मागर्, फोटर्,मुंबई .भारत
फोन ( 2260 1000,फैक्स 22702290 ईमेल
, –400001
Financial Markets Regulation Department, Central Office Building, 9th Floor, Shahid Bhagat Singh Marg, Fort, Mumbai – 400001. India
: 91-22) : (91-22) - : cgmfmrd@rbi.org.in
Tel: (91-22) 2260 1000, Fax: (91-22) 22702290 e-mail- cgmfmrd@rbi.org.in
िहन्दी आसान है, इसका �योग बढ़ाइए4. Accordingly, the revised limits (in absolute terms) for the different categories, including the
limits for corporate bonds announced, vide A.P. (DIR Series) Circular No. 14 dated March 31,
2021, shall be as under (Table 1):
Table - 1: Investment limits for FY 2021-22
all figures in ₹ Crore
G-Sec
G-Sec SDL SDL Long Corporate
Long Total Debt
General General Term Bonds
Term
Current FPI limits ^ 2,34,531 1,03,531 67,630 7,100 5,41,488 9,54,280
Revised limit for the
HY Apr 2021-Sept 2,43,914 1,12,914 76,766 7,100 5,74,263 10,14,957
2021
Revised limit for the
HY Oct 2021-Mar 2,53,298 1,22,298 85,902 7,100 6,07,039 10,75,637
2022
^ as on March 31, 2021
5. AD Category – I banks may bring the contents of this circular to the notice of their
constituents and customers concerned.
6. 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/approval, if any, required under any other law.
Yours faithfully
(Dimple Bhandia)
Chief General Manager