CIRCULAR No. CIR/IMD/FIIC/8/2014 April 07, 2014

To

All Foreign Institutional Investors through their designated Custodians of Securities

The Depositories (NSDL and CDSL)

Sub: Change in investment conditions / restrictions for FII/QFI investments in government debt securities

1. Pursuant to the announcements made in the First Bi-monthly Monetary Policy Statement, 2014- 15 dated April 1, 2014 by the Reserve Bank of India (RBI), it has been decided as follows:

2. FIIs/QFIs shall henceforth be permitted to invest only in dated government securities having residual maturity of one year or above.

3. Existing FII/QFI investments in T-Bills shall be allowed to taper off on maturity/sale. No further purchases in T-Bills shall be permitted. The investment limits vacated at the shorter end shall be available at longer maturities.

4. The overall Government Debt investment limit for FIIs/QFIs shall remain unchanged at US$ 30 billion.

5. Accordingly the FII/QFI debt investment limits are as follows:

S. No.

Type of
Instrument

Cap (USD bn)

Cap
(INR
Crore)

Remarks

1 Government Debt 20

99,546

Available on demand. Eligible investors may invest only in dated securities of residual maturity of one year and above, and existing investment in Treasury Bills will be allowed to taper off on maturity/sale
2 Government Debt 10

54,023

Available on demand for FIIs registered with SEBI as Sovereign Wealth Funds, Multilateral Agencies, Endowment funds, Insurance Funds, Pension Funds and Foreign Central Banks. Eligible investors may invest only in dated securities of residual maturity of one year and above.
3 Corporate Debt 51

244,323

Available on demand. Eligible investors may invest in Commercial Papers only up to US$ 2 billion within the limit of US$ 51 billion
Total 81

397,892

  This circular shall come into effect immediately. This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992.

A copy of this circular is available at the web page “Circulars” on our website sebi.gov.in. Custodians are requested to bring the contents of this circular to the notice of their FII clients.

Yours faithfully,

S MADHUSUDHANAN
Deputy General Manager
Tel No.: 022-26449614
Email: smadhu@sebi.gov.in

—————————————-

RBI/2013-14/556
A.P. (DIR Series) Circular No.118

April 07, 2014

To

All Category – I Authorised Dealer Banks

Madam / Sir,

Foreign investment in India in Government Securities

Please refer to paragraph 24 of first bi-monthly Monetary Policy statement, 2014-15.

2. Attention of AD Category-I banks is invited to A.P.(DIR Series) Circular No.94 dated April 1, 2013 read with A.P.(DIR Series) Circular No.111 dated June 12, 2013 and A.P.(DIR Series) Circular No.112 dated March 25, 2014, in terms of which the present limit for investment in Government Securities by SEBI registered FIIs, QFIs, long term investors and FPIs registered in accordance with SEBI guidelines stands at USD 30 billion. Out of the above limit, a sub-limit of USD 5.5 billion is available for investment in Treasury Bills (T-bills). Further, in terms of A.P. (DIR Series) Circular No.99 dated January 29, 2014, a sub-limit of USD 10 billion for investment in Government dated securities within the total limit of USD 30 billion is available to long term investors registered with SEBI – viz. Sovereign Wealth Funds (SWFs), Multilateral Agencies, Pension/ Insurance/ Endowment Funds and foreign Central Banks.

3. On a review, to encourage longer term flows, it has now been decided that foreign investment by all eligible investors including RFPIs shall henceforth be permitted only in Government dated securities having residual maturity of one year and above and existing investments in T-bills and Government dated securities of less than one year residual maturity shall be allowed to taper off on maturity/ sale.

The revised position in respect of the investment limit in Government dated securities is given below:

Instrument/s

Limit

Eligible Investors

Remarks

Government dated securities – Securities having residual maturity of one year and above.

USD 30 billion

RFPIs (including existing FIIs and QFIs) and Long term investors registered with SEBI – SWFs, Multilateral Agencies, Pension/ Insurance / Endowment Funds and foreign Central Banks.

Existing investment in T-bills and Government dated securities of less than one year residual maturity shall be allowed to taper off on maturity/sale.
No fresh investment in T-bills and Government dated securities of less than one year residual maturity allowed.

4. Necessary operational guidelines in this regard will be issued by SEBI.

5. All other existing conditions for investment in Government securities 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

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