FAX NO. 91 22 22829520

Circular No. IMD/CUST/ 14 /2004

March 19, 2004


All Foreign Institutional Investors and Custodian of Securities

Dear Sir / Madam,

Sub: FII investment in debt securities

SEBI (Foreign Institutional Investors) Regulations, 1995 permits FII investment in debt securities, including Government securities, treasury bills and corporate debt securities, through 100% debt route as well as through the equity route where upto 30 % investments can be made in debt securities.

Government has now clarified that the FII limit allocated every year under their relevant guidelines is a cumulative limit and since limit has not been finalized for 2003-04, the existing cap of US$ 1 billion for investment by 100% debt FIIs in debt securities and investment under the 70:30 route in dated Government securities and treasury bills for the year 2002-03 will continue.

In view of the above, the following shall be applicable with immediate effect:Investment under the 70:30 route in dated Government securities and treasury bills is capped at US$ 100 million. Further investment shall be subject to availability of head room under this route.Individual limits earlier allocated for 100% debt funds stand non-operative and will be realigned based on the capped limit of US$ 900 million for 100% debt funds. The revised limits will be advised to the 100% debt funds separately. Unutilised limit, if any, shall not be available for investment until fresh limits are allocated. Further investment / rollover of existing positions shall be permissible subject to availability of limits under the realigned limits. A copy of the circular is available at the web page “Foreign Institutional Investors” on our website The custodians are requested to bring the contents of this circular to the notice of their FII clients.

Yours faithfully,


Chief General Manager

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