Allocation methodology of debt investment limits to FIIs
Summary
The Government of India increased the cumulative debt investment limit for Foreign Institutional Investors in Corporate Debt to USD 15 billion. Eight billion dollars of this limit is allocated via an open bidding platform provided by stock exchanges, while smaller amounts are allocated on a first-come-first-served basis. The circular outlines specific procedural details including bid minimums, pricing mechanisms, allocation priorities, and utilization timeframes.
Text
The Government of India has reviewed the External Commercial Borrowing policy and has increased the cumulative debt investment limit by USD 9 billion (from USD 6 billion to USD 15 billion) for FII investments in Corporate Debt.
It has been decided that USD 8 billion shall be allocated to the market participants in an open bidding platform
The bidding platform shall be provided by the stock exchanges.
The bidding session shall be two hours.
The existing trading members shall have access to the bidding platform. FIIs/sub-accounts shall provide the mandate to these trading members, who in turn shall bid for the limits.
The minimum amount which can be bid for is Rs 250 cr.
The minimum tick size shall be Rs 100 cr.
Bid price shall be expressed in basis point.
A minimum flat fee of Rs 1000 per successful bid shall be levied for the allocated amount. Thus the amount payable by the successful bid shall be minimum flat fee of Rs 1000 or bid price which ever is higher.
Successful bids shall be based on price and within that time priority.
No single entity shall be allocated more that Rs 10, 000 cr. of the investment limit
Time period for utilization of the limits allocated in this manner shall be 45 days
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Source: SecMarx — Allocation methodology of debt investment limits to FIIs. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.