## Policy Summary: Separate Limit for Foreign Portfolio Investors in Interest Rate Futures (IRFs)
**Effective Date:** March 1, 2018
**Issuing Authority:** Reserve Bank of India (RBI)
**Purpose:** To facilitate further market development and ensure uninterrupted access for Foreign Portfolio Investors (FPIs) to Interest Rate Futures (IRFs).
**Key Provisions:**
* A separate limit of ₹5,000 crore has been allocated to FPIs for long positions in IRFs. This limit is independent of the existing FPI limit for Government Securities (G-secs).
* The aggregate long position of all FPIs with a net long position in any IRF instrument shall not exceed ₹5,000 crore, aggregated across all IRF instruments.
* The total gross short sold position of any FPI shall not exceed its consolidated long position in Government securities and Interest Rate Futures, at any point in time.
* The existing limit of ₹3,01,500 crore for FPI investment in G-secs will be exclusively available for investment in G-secs.
* All other terms and conditions of the existing IRF directions remain unchanged.
**Regulatory Context:**
* This policy is issued under Section 45W of the RBI Act, 1934.
* This policy refers to Paragraph 8 of the statement on Developmental and Regulatory Policies, issued as part of the third Bi-monthly Monetary Policy Statement for 2017-18 dated August 02, 2017.
* It amends para 4.2 of the RBI Directions No. IDMD.PCD.07/EDRG/2013 dated December 05, 2013.
**Operational Guidelines:** Detailed operational guidelines will be issued separately by the Securities and Exchange Board of India (SEBI).
**Contact Information:** Financial Markets Regulation Department, Central Office, 1st Floor, Main Building, Shahid Bhagat Singh Marg, Fort, Mumbai – 400001. Tel: 91-22-2260 3000, Fax: 91-22-22702290, email: cgmfmrdrbi.org.in. Website: www.rbi.org.in
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the country's monetary policy.
Interest Rate Futures: Financial contracts whose value is based on future interest rates.
Foreign Portfolio Investors: Investors who invest in financial assets of a country without directly managing them.
Government Securities: Debt instruments issued by the government to finance its expenditures.
Securities and Exchange Board of India: The regulatory body for the securities market in India.
RBI Act, 1934: The legislation that established the Reserve Bank of India and defines its powers and functions.
Mumbai, Maharashtra: The city where the Central Office of the Financial Markets Regulation Department of RBI is located.
T. Rabi Sankar: Chief General Manager at Reserve Bank of India
भारतीय �रज़व र् बक�
RESERVE BANK OF INDIA
www.rbi.org.in
RBI/2017-18/137
FMRD.DIRD.6/14.03.001/2017-18 March 1, 2018
All market participants
Madam/Sir,
Separate limit of Interest Rate Futures (IRFs) for Foreign Portfolio Investors (FPIs)
Please refer to Paragraph 8 of the statement on Developmental and Regulatory Policies,
issued as part of the third Bi-monthly Monetary Policy Statement for 2017- 18 dated
August 02, 2017, wherein a separate limit of Interest Rate Futures for Foreign Portfolio
Investors was proposed.
2. Currently, the FPI limit for Government Securities (G-secs) is fungible between
investments in G-secs and investment in IRF. FPI long positions in IRF are not allowed on
G-sec limit utilisation reaching 90%. To facilitate further market development and to ensure
that access of FPIs to IRFs remains uninterrupted, it has been decided to allocate FPIs a
separate limit of ₹ 5,000 crore for long position in IRFs. Accordingly, para 4.2 of the RBI
Directions No. IDMD.PCD.07/ED(RG)-2013 dated December 05, 2013 is amended to read
as follows:
“Foreign Portfolio Investors, registered with Securities and Exchange Board of India,
are permitted to purchase or sell Interest Rate Futures subject to the following
conditions:
(i) the aggregate long position of all FPIs, each of whom has a net long position in
any IRF instrument, shall not exceed ₹ 5000 crore, aggregated across all IRF
instruments,
�वत्तीय बाज़ार �व�नयमन �वभाग,क�द्र�य कायार्लय, पहल� मंिजल, मुख्य भवन,शह�द भगत �सहं माग,र् फोटर्,मुंबई–400001.भारत
फोन: (91-22) 2260 3000,फैक्स: (91-22) 22702290 ई-मेल: cgmfmrd@rbi.org.in
Financial Markets Regulation Department, Central Office, 1st Floor, Main Building, Shahid Bhagat Singh Marg, Fort, Mumbai – 400001. India
Tel: (91-22) 2260 3000, Fax: (91-22) 22702290 e-mail- cgmfmrd@rbi.org.in
िहन्दी आसान ह,ै इसका प्रयोग बढ़ाइएand
(ii) the total gross short (sold) position of any Foreign Portfolio Investor shall not
exceed its consolidated long position in Government securities and Interest Rate
Futures, at any point in time”.
3. The limits prescribed for investment by FPIs in G-secs (currently ₹ 3,01,500 crore) will
be exclusively available for investment in G-secs. All other terms and conditions of the
extant IRF directions will remain unchanged.
4. The detailed operational guidelines in this regard will be issued separately by SEBI.
5. The above directions are issued under section 45 (W) of the RBI Act, 1934.
Yours faithfully
(T. Rabi Sankar)
Chief General Manager