| Date: |
03-02-2015
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| Notification No: |
RBI/2014-15/448 A.P.(DIR Series) Circular No. 71
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| Issuing Authority: |
RBI
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| Type: |
A.P.D.(Series) Circulars
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| File No: |
RBI/2014-15/448 |
| Subject: |
Foreign investment in India by Foreign Portfolio Investors
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|
RBI/2014-15/448
A.P.(DIR Series) Circular No. 71
February 03, 2015
To,
All Authorised Persons
Madam/ Sir,
Foreign investment in India by Foreign Portfolio Investors
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 and to
A.P.
(DIR Series) Circular No. 13 dated July 23, 2014 in terms of which all future
investment in government securities by registered Foreign Portfolio Investors
(FPIs) shall be required to be made in government bonds with a minimum residual
maturity of three years.
- Attention of AD Category-I banks is invited to the announcement in
the Sixth Bi-Monthly Monetary Policy Statement, 2014-15, issued on February
03, 2015 in terms of which all future investment by FPIs in the debt market
in India will be required to be made with a minimum residual maturity of
three years.
- Accordingly, all future investments by an FPI within the limit for
investment in corporate bonds shall be required to be made in corporate
bonds with a minimum residual maturity of three years. Further, all future
investments against the limits vacated when the current investment runs off
either through sale or redemption, shall be required to be made in corporate
bonds with a minimum residual maturity of three years.
- FPIs shall not be allowed to make any further investment in liquid and
money market mutual fund schemes.
- There will, however, be no lock-in period and FPIs shall be free to sell
the securities (including those that are presently held with less than three
years residual maturity) to domestic investors.
- The aforesaid directions come into force with immediate effect. Further
operational guidelines, if any, will be issued by SEBI.
- All other existing conditions for investment by FPIs in the debt market
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
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