Debt Allocation Mechanism for FII
Summary
This circular updates the debt allocation and re-investment mechanisms for Foreign Institutional Investors (FIIs) in India. It establishes a uniform 50% re-investment facility based on previous year-end holdings effective from January 1, 2014. The document also provides transitional rules for FIIs acquiring limits after January 3, 2012, and clarifies existing timelines for government and corporate debt.
Text
SEBI provided a facility of re-investment of up to two years or twice the size of the debt portfolio to FIIs that had already acquired limits before January 03, 2012.
Beginning January 01, 2014, FIIs/Sub-Accounts could re-invest during each calendar year to the extent of 50% of their debt holdings at the end of the previous calendar year.
FIIs/sub-accounts which did not hold any debt investment limits as on January 03, 2012 are allowed a cumulative re-investment facility to the extent of 50% of their maximum debt holding at any point of time during the calendar year 2013.
From January 01, 2014, the re-investment facility would be available during each calendar year to those FIIs which hold debt investments as on December 31 of the previous calendar year.
In respect of those FIIs which do not hold any debt investments as on December 31 of the previous calendar year, the re-investment facility given at Para 3 of this circular would be available during each calendar year.
The re-investment facility for those FIIs/ sub-accounts having debt limit prior to January 03, 2012, will remain available till December 31, 2013 in terms of the SEBI circular dated January 03, 2012.
The re-investment period, i.e. 5 working days for Government Debt and 15 working days for Corporate Debt shall remain the same as per the SEBI Circular CIR/IMD/FIIC/18/2010 dated November 26, 2010.
Source: SecMarx — Debt Allocation Mechanism for FII. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.