RBI proposes new route for FII investments in debt

Mumbai: Reserve Bank of India (RBI) has proposed an easier investment route for foreign institutional investors (FIIs) wanting to invest long term funds in the debt market. In a statement accompanying the monetary the central bank said that FIIs voluntarily committing to retain a minimum required percentage of their investments for a period of time in India can apply for a new Voluntary Retention Route’ (VRR)’.

“Under the proposed Route, FIIs will have more operational flexibility in terms of instrument choices as well as exemptions from regulatory provisions such as the cap on short-term investments (less than one year) at 20 per cent of portfolio size, concentration limits, and caps on exposure to a corporate group (20 per cent of portfolio size and 50 per cent of a single issue),” RBI said.

A discussion paper on the investment using this route will be placed on RBI’s website for public consultation later today.