Brief Overview:
Reserve Bank of India (“RBI”) has eased restrictions for Foreign Portfolio Investors (“FPIs”) in corporate debt.
Technical Details:
RBI has recently relaxed norms for FPIs investing in corporate debt securities through the General Route. The key changes include:
1) Removal of the short-term investment limit: Previously, FPIs had restrictions on investing in corporate debt instruments with residual maturity less than one year to 30% of its total investment in such securities. This limit has now been withdrawn.
2) Elimination of the concentration limit: FPIs were earlier subject to a cap on how much they could invest in a single corporate issuer basis its total investment limit. This restriction has also been removed.
JC Takeaway:
These relaxations aim to enhance investment flexibility and boost liquidity in India’s corporate debt market. The RBI’s decision comes amid global financial volatility and is expected to make Indian debt markets more attractive to foreign investors.
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