ANNOUNCEMENT 24 Jan 2013In January 2013, the government of India announced changed rules for foreign investors.
NUMBER OF INTERVENTIONS
A. P. (DIR Series) Circular No.80
In early 2013, the Indian central bank liberalised foreign access to the Indian sovereign and corporate bond market.
On 24 January 2013, the Reserve Bank of India relaxed rules for Foreign Institutional Investors (FIIs) activities in the Indian corporate and government debt market.
Under the new regime, FIIs may purchase up to USD 15 billion worth of dated government securities, up from a cap of USD 10 billion before the change. Furthermore, the conditions associated to such purchases have been relaxed. While FII investments in short-term government securities remain prohibited, the condition for a minimum residual maturity of 3 years has been abandoned.
The new rules also relax investments in corporate debt. For one, the limit for FII corporate debt investment outside the infrastructure sector has been raised to USD 25 billion, an increase of USD 5 billion. For two, the conditions applied to holdings of corporate debt from the infrastructure sector have been relaxed. The one year lock-in period for foreign investments in infrastructure corporate debt has been dispensed. The 5 year residual maturity requirements for investments by QualifiedForeign Investors has been modified to 3 years original maturity.