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RBI/2018-19/152
A.P. (DIR Series) Circular No. 26
March
27, 2019
To,
All Authorised Persons
Madam / Sir
Investment by Foreign Portfolio
Investors (FPI) in Government Securities Medium Term Framework
Attention of Authorised 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, 2017 notified vide Notification No. FEMA.20(R)/2017-RB dated November 07, 2017,
as amended from time to time and the relevant directions issued thereunder.
A reference is also invited to AP (DIR
Series) Circular No. 22 dated April 6, 2018 on the captioned
subject.
2. Revision of investment Limits
for 2019-20
a.
The
limit for FPI investment in Central Government securities (G-secs), State
Development Loans (SDLs) and corporate bonds shall be 6%, 2%, and 9% of
outstanding stocks of securities, respectively, in FY 2019-20.
b.
The
allocation of increase in G-sec limit over the two sub-categories –
‘General’ and ‘Long-term’ – has been set at 50:50 for the year 2019-20. The
entire increase in limits for SDLs has been added to the ‘General’
sub-category of SDLs.
c.
In
terms of para 3 (g) of the circular dated
April 06, 2018, the coupon reinvestment arrangement for G-secs shall
be extended to SDLs.
3. Accordingly, the revised
limits for the various categories, after rounding off, would be as under (Table 1):
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Table
1 - Revised Limits for FPI Investment in Debt - 2019-20 (Rupees billion)
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G-Sec
-General
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G-Sec
-Long Term
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SDL
-General
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SDL
-Long Term
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Corporate
Bonds
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Total
Debt
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Current Limit
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2,233
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923
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381
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71
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2,891
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6,499
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Revised Limit for the HY
Apr-Sep, 2019
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2,347
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1,037
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497
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71
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3,031
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6,983
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Revised Limit for the HY Oct
2019-March, 2020
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2,461
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1,151
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612
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71
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3,170
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7,465
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4. AD Category – I banks may
bring the contents of this circular to the notice of their constituents and
customers concerned.
5. 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/approval, if any, required under any other law.
Yours
faithfully
(T.
Rabi Sankar)
Chief General Manager
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