Investments by FPIs in Government securities
Summary
This circular enhances the investment limits for Foreign Portfolio Investors (FPIs) in Government securities effective April 04, 2016 and July 05, 2016. It details specific revised upper caps for Central Government securities, Long Term FPIs, and State Development Loans. The document also outlines procedures for auctioning free limits and making incremental limits available on tap.
Text
it has been decided to enhance the limit for investment by FPIs in Government Securities, for the next half year, as follows: a. Limit for FPIs in Central Government securities shall be enhanced to INR 140,000 cr on April 04, 2016 and INR 144,000 cr on July 05, 2016 respectively from the existing limit of INR 135,400 cr. b. Limit for Long Term FPIs... in Central Government securities shall be enhanced to INR 50,000 cr and INR 56,000 cr on April 04, 2016 and July 05, 2016 respectively from the existing limit of INR 44,100 cr. c. The limit for investment by all FPIs in State Development Loans (SDL) shall be enhanced to INR 10,500 cr on April 04, 2016 and INR 14,000 cr on July 05, 2016 respectively from the existing limit of INR 7,000 cr.
Accordingly, the revised FPI debt limits would be as follows: Government Debt Present Upper Cap 135,400 Revised Upper Cap with effect from April 04, 2016 140,000 Revised Upper Cap with effect from July 05, 2016 144,000; Government Debt – Long Term Present Upper Cap 44,100 Revised Upper Cap with effect from April 04, 2016 50,000 Revised Upper Cap with effect from July 05, 2016 56,000; State Development Loans Present Upper Cap 7,000 Revised Upper Cap with effect from April 04, 2016 10,500 Revised Upper Cap with effect from July 05, 2016 14,000; Total Present Upper Cap 186,500 Revised Upper Cap with effect from April 04, 2016 200,500 Revised Upper Cap with effect from July 05, 2016 214,000
The free limit as on April 03, 2016 within the INR 135,400 cr limit along with the new debt limits of INR 4,600 cr shall be auctioned on the exchange platform on April 04, 2016. ... In accordance with Para 5(d) of SEBI circular CIR/IMD/FIIC/19/2014 dated October 09, 2014, FPIs have an utilisation period of 15 days within which they have to make the investments. Since the auction being conducted on April 04, 2016 is a special auction for allocation of additional limits, the unutilised limits from the auctions of March 28, 2016 and April 04, 2016 along with any additional limits freed up by the sale/redemption of securities by FPIs as on April 22, 2016, shall be auctioned on April 25, 2016. All other existing terms and conditions pertaining to FPI debt limit auctions shall continue to apply.
The incremental limits of INR 5,900 cr and INR 6,000 cr for Long Term FPIs shall be available for investment on tap with effect from April 04, 2016 and July 05, 2016 respectively.
The incremental limits of INR 3,500 cr each for investment by FPIs in SDLs shall be available for investment on tap with effect from April 04, 2016 and July 05, 2016 respectively.
Further, keeping in view the extent of utilisation of the limits for Central Government securities by long term and other investors, it has been decided that from the next half-year onwards i.e. from October 01, 2016, any unutilised limit within the Government debt limit for Long Term FPIs, at the end of the half-year, shall be made available for investment as additional limit to all categories of FPIs for the subsequent half-year.
All other existing terms and conditions, including the security-wise limits, investment of coupons being permitted outside the limits and investments being restricted to securities with a minimum residual maturity of three years, shall continue to apply.
Source: SecMarx — Investments by FPIs in Government securities. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.