Foreign Portfolio Investment in Corporate debt securities
Summary
This circular modifies the Combined Corporate Debt Limit (CCDL) by excluding foreign investment in rupee-denominated bonds issued overseas by Indian corporates. The CCDL is renamed as the Corporate Debt Investment Limits (CDIL), with specific transition values effective from October 3, 2017. A new sub-limit for Long Term FPIs investing in the infrastructure sector is established within the CDIL framework.
Text
SEBI redefined the INR 244,323 cr Corporate debt limit for FPIs as the Combined Corporate Debt Limit (CCDL) for all foreign investments in Rupee denominated bonds issued both onshore and overseas by Indian corporates.
RBI has decided to exclude foreign investment in rupee denominated bonds (RDB) issued overseas by Indian corporates, from the Combined Corporate Debt Limit (CCDL).
With effect from October 03, 2017, foreign investments in RDB shall no longer be reckoned against the CCDL. Further, the CCDL shall be renamed as the Corporate Debt Investment Limits (CDIL) for FPIs. The upper limit for CDIL shall, henceforth, be stated only in Rupee terms.
A total of INR 44,001 cr reckoned against RDB within the CCDL shall be carved out and added to the new limit of CDIL. The table specifies CDIL values: INR 227,322 cr on Oct 03, 2017, and INR 244,323 cr on Jan 01, 2018.
A sub-limit exclusively for investments by Long Term FPIs (Sovereign Wealth Funds, Multilateral Agencies, Endowment Funds, Insurance Funds, Pension Funds and Foreign Central Banks) in the infrastructure sector shall be created within the overall CDIL. The term ‘Infrastructure’ shall be as defined under the Master Direction on External Commercial Borrowings issued by the Reserve Bank of India.
This sub-limit for Long Term FPIs shall be INR 9,500 cr with effect from October 03, 2017 and shall be enhanced to INR 19,000 cr on January 01, 2018. This sub-limit shall be available for investment on tap.
The sub-limit for Long Term FPIs shall include their investment in both listed and unlisted corporate debt issued by companies in the infrastructure sector. Investments by FPIs in the unlisted corporate debt securities and securitised debt instruments shall not exceed INR 35,000 cr within the extant CDIL.
All other extant conditions with respect to FPI investments in corporate debt securities shall continue to apply.
Source: SecMarx — Foreign Portfolio Investment in Corporate debt securities. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.