RBI/2013-14/368
A. P. (DIR Series) Circular No.74
November 11, 2013
To
All Category-I Authorised Dealer Banks
Madam / Sir,
Foreign investment in India - participation by SEBI registered FIIs, QFIs and
SEBI registered long term investors in credit enhanced bonds
Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to
Schedule 5 to the Foreign Exchange Management (Transfer or Issue of Security by
a Person Resident outside India) Regulations, 2000 notified vide
Notification
No. FEMA.20/2000-RB dated May 3, 2000, as amended from time to time, in terms of
which SEBI registered Foreign Institutional Investors (FIIs), Qualified Foreign
Investors (QFIs) and long term investors, such as, Sovereign Wealth Funds
(SWFs), Multilateral Agencies, Pension/ Insurance/ Endowment Funds, foreign
Central Banks, may purchase, on repatriation basis, Government securities and
non-convertible debentures (NCDs) / bonds issued by an Indian company subject to
such terms and conditions as mentioned therein and limits as prescribed for the
same by RBI and SEBI from time to time. The present limits for investments by
FIIs, QFIs and long term investors registered with SEBI in Government securities
and corporate debt stands at USD 30 billion and USD 51 billion, respectively.
- Attention of AD Category - I banks is also invited to
A.P. (DIR Series)
Circular No. 40 dated March 02, 2010 and
A.P. (DIR Series) Circular No. 120
dated June 26, 2013, relating to External Commercial Borrowings (ECB) Policy –
Structured Obligations. In terms of A.P. (DIR Series) circular dated June 26,
2013, credit enhancement can be provided by eligible non-resident entities to
the domestic debt raised through issue of INR bonds/ debentures by all borrowers
eligible to raise ECB under the automatic route. All the other terms and
conditions mentioned in para 4 (iv), (vi) to (viii) of
A.P. (DIR Series)
Circular No. 40 dated March 02, 2010 will remain unchanged.
- On a review, it has been decided to allow SEBI registered Foreign
Institutional Investors (FIIs), Qualified Foreign Investors (QFIs) and long term
investors registered with SEBI – Sovereign Wealth Funds (SWFs), Multilateral
Agencies, Pension/ Insurance/ Endowment Funds, foreign Central Banks - to invest
in the credit enhanced bonds, as per paragraph 3 and 4 of A.P. (DIR Series)
Circular No. 120 dated June 26, 2013, up to a limit of USD 5 billion within the
overall limit of USD 51 billion earmarked for corporate debt.
- AD Category - I banks may bring the contents of this circular to the notice
of their constituents and customers.
- Reserve Bank of India has since amended relevant Regulations vide
Notification No.FEMA.289/2013 dated October 4, 2013, notified vide
G.S.R.No.681(E) dated October 11, 2013.
- The directions contained in this circular have been issued under sections
10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and
are without prejudice to permissions / approvals, if any, required under any
other law.
Yours faithfully,
(Rudra Narayan Kar)
Chief General Manager-in-Charge