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FDI: Entry and ownership rule
On 14 February 2014, the Reserve Bank of India amended the limit of investment in Commercial Papers by registered Foreign Instutional Investors, Qualified Foreign Investors and other long term investors. Prior to the change, foreign investors were allowed to hold a maximum of USD 3.5 billion in short-term Commercial Paper. This limit has been decreased to USD 2 billion.
The overall cap on foreign investment into corporate debt remains at USD 51 billion. The balance of USD 1.5 billion is thus being made available for corporate debt investment outside short-term commercial paper.
According to the RBI, the motivation behind the stated change is to promote longer term investments.
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