FPI investment limit on govt papers remain unchanged: RBI

The investment limit for foreign portfolio investors (FPIs) in government bonds will not be changed this financial year, the Reserve Bank of India said in a notification Wednesday.

“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 2020-21,” the central bank said.

Although absolute investment limits will be higher as bond sales every year increases the outstanding stock.


For example, the cumulative limit for FPIs on all local securities will be at Rs 9,54,280 crore at the end of the financial year compared with Rs 7,46,500 crore now.

At the beginning of this financial year, FPIs have utilised over half of the total limits in general central government securities while the usage is just about 24 percent in long term papers, show data from the Clearing Corporation of India. They have showed little interest in owning state government bonds.

Interest on general sovereign securities was relatively much higher four months ago with the overseas investors gobbling up over 75 percent of the limit.

All investments by eligible investors in the specified securities will be under the Fully Accessible Route (FAR) from the date on which the FAR comes into effect, RBI said.