RBI/2013-14/494
A.P. (DIR Series) Circular No.104
February 14, 2014
To
All Category – I Authorised Dealer Banks
Madam / Sir,
Foreign investment in India by SEBI registered FII, QFI and long term
investors in Corporate Debt
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),
SEBI registered Qualified Foreign Investors (QFIs) and long term investors
registered with SEBI 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.
2. Attention of AD Category-I banks is also invited to
A.P.(DIR Series)
Circular No.94 dated April 1, 2013, in terms of which the present limit for
investment by SEBI registered FIIs, QFIs and long term investors in Corporate
debt stands at USD 51 billion. Out of the above limit of USD 51 billion, a
sub-limit of USD 3.5 billion is available for investment by eligible investors
in Commercial Paper (CP). This sub-limit is being presently utilised only to the
extent of around 58% of the limit put in place by SEBI.
3. On a review, to encourage long term investors, it has now been decided, to
reduce, with immediate effect, the existing Commercial Paper sub-limit of USD
3.5 billion by USD 1.5 billion to USD 2 billion. The balance USD 1.5 billion
shall, however, continue to be part of the total Corporate debt limit of USD 51
billion and will be available to eligible foreign investors for investment in
Corporate debt.
The revised position is given below:
| Instruments |
Limit |
Eligible Investors |
Remarks |
| Corporate Debt including Commercial Papers
|
USD 51 Billion |
FIIs, QFIs and Long terms investors registered with SEBI – Sovereign Wealth
Funds (SWFs), Multilateral Agencies, Pension/ Insurance/ Endowment Funds,
Foreign Central Banks. |
Eligible Investors may invest in Commercial Papers only upto USD 2 billion
within the limit of USD 51 billion. |
4. The operational guidelines in this regard will be issued by SEBI.
5. All other existing conditions for investment in Corporate debt remain
unchanged.
6. AD Category – I banks may bring the contents of this circular to the notice
of their constituents and customers concerned.
7. 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