RBI raises FPI's limit in govt bonds by Rs 14,200 crore

RBI on Thursday increased foreign portfolio investors' limit on investment in government bonds by an aggregate Rs 14,200 crore for the October-December period in line with the formula related to total outstanding government borrowings.

The limits for investment by FPIs for the quarter October-December 2017 is increased by Rs 8,000 crores in central government securities and Rs 6,200 crore in state development loans, RBI said in a notification. The revised limits will be effective from October 3, 2017. Foreigners can own 5 per cent outstanding of central government bonds, and 2 per cent of outstanding state loans.

The latest move takes the total increase in investment caps for FPIs in G-secs up to Rs 2.5 lakh crore. On the SDLs, the cap on investments by FPIs, including the long term ones, has been moved up to Rs 39,300 crore.

The aggregate limit now stands at Rs 2.8 lakh crore. The operational guidelines relating to allocation and monitoring of limits will be issued by Sebi, it said. Last week, RBI removed masala bonds, or rupee-denominated debt securities sold abroad, from the corporate bond investment limit that remains almost full amid strong overseas investor interest.