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RBI/2019-20/150
A.P. (DIR Series) Circular No.18
January 23, 2020
To
All Authorised persons
Madam / Sir,
Investment by
Foreign Portfolio Investors (FPI) in Debt
Attention of Authorised Dealer
Category-I (AD Category-I) banks is invited to Foreign Exchange Management (Debt
Instruments) Regulations, 2019 notified vide Notification No. FEMA. 396/2019-RB
dated October 17, 2019, as amended from time to time, and the relevant
directions issued thereunder. A reference is also invited to the A.P. (DIR
Series) Circular No. 31 dated June 15, 2018 (hereinafter, Directions) read with
A.P. (DIR Series) Circular No. 19 dated February 15, 2019.
2. On a
review, the following changes are made to the Directions: -
a) In terms
of paragraph 4(b) (i) of the Directions, short-term investments by an FPI shall
not exceed 20% of the total investment of that FPI in either Central Government
Securities (including Treasury Bills) or State Development Loans. This
short-term investment limit is hereby increased from 20% to 30%.
b) In
terms of paragraph 4(b) (ii) of the Directions, short-term investments by an FPI
shall not exceed 20% of the total investment of that FPI in corporate bonds.
This short-term investment limit is hereby increased from 20% to 30%.
c)
FPI investments in Security Receipts are currently exempted from the short-term
investment limit (paragraph 4 (b)(ii)) and the issue limit (paragraph
4(f)(iii)). These exemptions shall also extend to FPI investments in the
following securities:
Debt instruments issued by Asset Reconstruction
Companies; and
Debt instruments issued by an entity under the Corporate
Insolvency Resolution Process as per the resolution plan approved by the
National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016
3. The updated Directions are attached.
4. These directions are
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
(Saswat Mahapatra)
Deputy General Manager (O-i-C)
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