Investments by FPIs in corporate debt securities
Summary
This circular permits Foreign Portfolio Investors to invest in unlisted corporate debt and securitised debt instruments. It establishes a specific investment cap of INR 35,000 crore within the existing corporate debt limit for these new categories. The regulations align with recent RBI amendments while maintaining other existing terms for FPI investments.
Text
RBI amended FEMA Regulations to permit FPIs to invest in unlisted corporate debt and securitised debt instruments, enhancing the list of eligible instruments via circular dated November 17, 2016.
SEBI (Foreign Portfolio Investors) (Second Amendment) Regulations, 2017 were notified to permit FPIs to invest in specified unlisted corporate debt and securitised debt instruments.
Investment in unlisted corporate debt securities is permitted subject to MCA guidelines, minimum residual maturity of three years, and end-use restrictions on real estate, capital market, and land purchase.
The custodians of the FPIs shall put in place an appropriate mechanism to ensure compliance with conditions prescribed by RBI from time to time.
Permitted investment includes any certificate or instrument issued by a special purpose vehicle (SPV) set up for securitisation of asset/s where banks, FIs or NBFCs are originators.
Permitted investment includes any certificate or instrument issued and listed in terms of the SEBI(Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008.
Investment by FPIs in the unlisted corporate debt securities and securitised debt instruments shall not exceed INR 35,000 cr within the extant Corporate debt limit which currently is INR 2,44,323 cr.
Investment by FPIs in securitised debt instruments shall not be subject to the minimum 3-year residual maturity requirement.
All other existing terms and conditions for FPI investments in corporate debt securities shall continue to apply.
This circular shall come into effect immediately and is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992.
Source: SecMarx — Investments by FPIs in corporate debt securities. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.