RBI allows FIIs to invest up to $25 billion in infrastructure bonds

MUMBAI: The Reserve Bank of India (RBI) today allowed foreign institutional investors (FIIs) to invest up to USD 25 billion, up from existing limit of USD 5 billion, in bonds and debentures of Indian infrastructure companies.

FIIs registered with SEBI would also be allowed to invest in non-convertible debentures and bonds issued by non-banking financial companies categorised as 'Infrastructure Finance Companies' (IFCs) by RBI within the overall limit of USD 25 billion, the central bank said in a notification.

This was subject to conditions that such instruments shall have a residual maturity of five years or above and the investments would have a lock-in-period of three years, it said.

This lock-in-period shall be computed from the time of first purchase by FIIs, it said.

These changes would also apply for QFI investment in units of mutual fund debt schemes within the limit of USD 3 billion, it said.

It is to be noted that the government relaxed norms allowing foreign investors to invest in infrastructure bonds and trade such instruments among themselves in September.