Enhancement in Foreign Investment limits in Government debt
Summary
The Government of India has enhanced the Government Debt Limits by USD 5 billion for specific categories of Foreign Institutional Investors. This enhanced limit is exclusively available to Sovereign Wealth Funds, Multilateral Agencies, Endowment Funds, Insurance Funds, Pension Funds, and Foreign Central Banks. A special one-time window of up to USD 250 million per FII is also provided for those who have exhausted their reinvestment limits, subject to a 90-day lock-in period.
Text
The Government of India has enhanced the Government Debt Limits by USD 5 billion (equivalent to approximately INR 29,137 cr converted at the RBI reference rate of 1 USD = INR 58.274 as on June 12, 2013).
It has been decided that the aforesaid enhanced limit of USD 5 billion shall be available for investments only to those FIIs which are registered with SEBI under the categories of Sovereign Wealth Funds (SWFs), Multilateral Agencies, Endowment Funds, Insurance Funds, Pension Funds and Foreign Central Banks.
To begin with, the amount of USD 5 billion together with the unutilized limit of INR 29,812 cr (equivalent to approximately USD 6.2 billion) as on May 31, 2013 (due for auction on June 20, 2013) will be made immediately available for investment on tap by these investors mentioned in Para 2 above.
The amount not utilized as on June 18, 2013 (out of the presently unutilized limit of INR 29,812 cr) will be put on auction on June 20, 2013. Similar exercise shall continue every month.
With regard to those FIIs which have exhausted their reinvestment limits, as a one time measure, a special window of upto USD 250 million per FII shall be available till the date of the next auction i.e. June 20, 2013 subject to the aggregate investments in Government debt by all FIIs/QFIs being limited to USD 25 Billion (i.e. the limit other than the limit of USD 5 billion earmarked for investors mentioned in Para 2 above). Such investments made by FIIs using the special window shall be subject to a lock-in of 90 days. Moreover, these investments will not be eligible for re-investment facility.
Source: SecMarx — Enhancement in Foreign Investment limits in Government debt. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.