RBI notifies limits for investment in debt and sale of credit default swaps by FPIs

On April 19, 2022, the Reserve Bank of India (RBI) has issued a notification on Limits for investment in debt and sale of Credit Default Swaps by Foreign Portfolio Investors (FPIs).

Key points:

  • Limits for FPI investment in Government securities (G-secs), State Development Loans (SDLs) and corporate bonds shall remain unchanged at 6%, 2% and 15% respectively, of outstanding stocks of securities for FY 2022-23.
  • All investments by eligible investors in the ‘specified securities’ shall be reckoned under the Fully Accessible Route (FAR) in terms of A.P.
  • Allocation of incremental changes in the G-sec limit (in absolute terms) over the two sub-categories – ‘General’ and ‘Long-term’ – shall be retained at 50:50 for FY 2022-23.
  • The entire increase in limits for SDLs (in absolute terms) has been added to the ‘General’ sub-category of SDL.
  • Revised limits (in absolute terms) for the different categories are mentioned below:

 

Table – 1: Investment limits for FY 2022-23
all figures in ₹ Crore
G-Sec General G-Sec Long Term SDL General SDL Long Term Corporate Bonds Total Debt
Current FPI limits 2,53,298 1,22,298 85,902 7,100 6,07,039 10,75,637
Revised limit for the HY Apr 2022-Sept 2022 2,60,594 1,29,594 89,365 7,100 6,37,455 11,24,107
Revised limit for the HY Oct 2022-Mar 2023 2,67,890 1,36,890 92,828 7,100 6,67,871 11,72,578
  • Aggregate limit of the notional amount of CDS sold by FPIs shall be 5% of the outstanding stock of corporate bonds. Accordingly, an additional limit of ₹2,22,623 crore is set out for FY 2022-23.

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