RBI/2014-15/145
A. P. (DIR Series) Circular No. 13
July 23, 2014
To,
All Authorised Persons
Madam/ Sir,
Foreign investment in India by SEBI registered Long term investors in
Government dated Securities
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.
- Attention of AD Category-I banks is also invited to
A.P. (DIR Series)
Circular No.99 dated January 29, 2014 in terms of which the present limit
for investments by FIIs, QFIs and long term investors in Government
securities stands at USD 30 billion, out of which a sub-limit of USD 10
billion is available for investment by long term investors in Government
dated securities.
- On a review, it has been decided to enhance the investment limit in
government securities available to FIIs/QFIs/FPIs by USD 5 billion by
correspondingly reducing the amount available to long term investor from USD
10 billion to USD 5 billion within the overall limit of USD 30 billion. The
incremental investment limit of USD 5 billion shall be required to be
invested in government bonds with a minimum residual maturity of three
years. Further, all future investment against the limit vacated when the
current investment by an FII/QFI/FPI runs off either through sale or
redemption shall also be required to be made in government bonds with a
minimum residual maturity of three years. It is, however, clarified that
there will be no lock-in period and FIIs/QFIs/FPIs shall be free to sell the
securities (including that are presently held with less than three years of
residual maturity) to the domestic investors.
- The operational guidelines in this regard will be issued by SEBI.
- All other existing conditions for investment in Government securities
remain unchanged.
- AD Category – I banks may bring the contents of this circular to the
notice of their constituents and customers concerned.
- 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,
(B.P.Kanungo)
Principal Chief General Manager