This circular, RBI/2016-17/265 A.P. (DIR Series) Circular No. 43, issued by the Reserve Bank of India (RBI) on March 31, 2017, addresses authorized dealer (AD) Category-I banks regarding Foreign Portfolio Investor (FPI) investment in Government securities. It announces an increase in the investment limits for FPIs in Central Government Securities and State Development Loans (SDLs) for the quarter of April-June 2017.
Specifically, the investment limit for FPIs in Central Government Securities will be increased by Rs. 110 billion, and the investment limit in SDLs will be increased by Rs. 60 billion. This results in the following revised limits, effective April 1, 2017: Central Government Securities: Aggregate FPIs: Rs 1565 billion, Long Term FPIs: Rs 745 billion; State Development Loans: For all FPIs Rs 2310 billion, Additional for Long Term FPIs Rs 270 billion with Total Rs 2580 billion. The total existing limit was Rs 2410 billion.
Unutilized limits for long-term investors at the end of March 2017 will be released for general category investment in April 2017. Existing conditions, including security-wise limits, coupon investment outside limits, and the three-year minimum residual maturity requirement, remain in effect. The Securities and Exchange Board of India (SEBI) will issue operational guidelines for limit allocation and monitoring.
AD Category-I banks are instructed to inform their constituents and customers. This circular is issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999. For further information, contact the Financial Markets Regulation Department, Main Building, 2nd Floor, Shahid Bhagat Singh Road, Fort, Mumbai – 400001. Tel: 91-22-22601000, Fax: 91-22-22702290, email: cgmfmrdrbi.org.in.
Key Entities Referenced
Foreign Portfolio Investors: Investors investing in Government Securities
Government Securities: Debt instruments issued by the government
Foreign Exchange Management Act, 1999: Act governing foreign exchange regulations in India
Central Government Securities: Securities issued by the Central Government
State Development Loans: Loans issued by the State Governments in India
Securities and Exchange Board of India: Regulator of the securities market in India
Mumbai, Maharashtra: Location of the Financial Markets Regulation Department
Reserve Bank of India: Central bank of India
RBI/2016-17/265
A.P.(DIR Series) Circular No. 43 March 31, 2017
To,
All Authorised Persons
Madam / Sir,
Investment by Foreign Portfolio Investors in Government Securities
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, 2000 notified vide Notification
No. FEMA.20/2000-RB dated May 3, 2000, as amended from time to time. The
limits for investment by foreign portfolio investors (FPIs) in Government securities
were last increased in terms of Medium Term Framework (MTF) announced vide
A.P. (DIR Series) Circular No. 4 dated September 30, 2016.
2. The limits for investment by FPIs in Central Government Securities and State
Development Loans (SDLs) for the quarter April-June 2017 are proposed to be
increased by Rs. 110 billion and Rs. 60 billion respectively.
3. The total increase in limits over the next quarter would, accordingly, be as
under:
Rs. Billion
State
Central Government securities Development
Loans
For all For all FPIs Aggregate
Additional
FPIs- (including
for Long Total
General Long Term
Term FPIs
Category FPIs)
Existing Limits 1520 680 2200 210 2410
Revised limits for quarter 1565 745 2310 270 2580
April-June, 2017
�वत्तीय बाज़ार �व�नयमन �वभाग, मख्ु य भवन, दसू र� मंिज़ल, शह�द भगत �सहं माग,र् फोटर्, मुंबई – 400001.
फोन: (91-22) 22601000, फैक्स: (91-22) 22702290 ई-मेल: fmrd@rbi.org.in
Financial Markets Regulation Department, Main Building,2nd Floor, Shahid Bhagat Singh Road, Fort, Mumbai – 400001.
Tel: (91-22) 22601000, Fax: (91-22) 22702290 e-mail- cgmfmrd@rbi.org.in: 2 :
The revised limits will be effective from April 1, 2017.
4. The limits for the long term investors remaining unutilized at the end of
March 2017 will be released for investment under the general category in April
2017.
5. All other existing conditions, including the security-wise limits, investment of
coupons being permitted outside the limits and investments being restricted to
securities with a minimum residual maturity of three years, will continue to apply.
6. The operational guidelines relating to allocation and monitoring of limits will
be issued by the Securities and Exchange Board of India (SEBI).
7. AD Category – I banks may bring the contents of this circular to the notice of
their constituents and customers concerned.
8. 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
(T. Rabi Sankar)
Chief General Manager