RBI increases Short-Term FPIs Limit
The Reserve Bank of India (RBI) recently increased the investment limit for FPIs in government and corporate bonds from 20 percent to 30 percent. In two separate notifications released by the banking regulator of India on Thursday, 23rd January 2020, in central and state government securities that include treasury bills, 30 percent of their portfolios can now be invested by the FPIs in short-term, the same also applies for corporate bonds.
As of now, the Foreign Portfolio Investors (FPI) could not invest more than 20 percent of their total investment in either central government securities or state development loans or corporate bonds. This relaxation is expected to attract more investments and increase the inflow of funds into the Indian market. FPIs are allowed to invest in exchange-traded funds that invest only in debt instruments. As per reports, in this month, the FPIs have sold their investments worth USD 1.6 billion in government debt papers following a combine USD 1.2 billion sold in the previous two months of November and December 2019.