Increase in FII debt limit in Government & Corporate debt category
Summary
The Securities and Exchange Board of India increased the Foreign Institutional Investor investment limits for government securities to US $ 15 billion and corporate bonds to US $ 20 billion. The incremental limits are allocated through a bidding process on the BSE with specific caps per entity and minimum bid amounts. Unutilized limits in the government debt long-term category are also allocated via bidding with separate caps and procedural requirements.
Text
Increase the current limit of FII investment in Government Securities by US $ 5 billion raising the cap to US $ 15 billion. The incremental limit of US $ 5 billion can be invested in securities without any residual maturity criterion;
Increase the current limit of FII investment in corporate bonds by US $ 5 billion raising the cap to US $ 20 billion. The incremental limit of US $ 5 billion can be invested in listed corporate bonds.
It has been decided that above incremental limits, shall be allocated to the market participants through the bidding process.
The bidding of this limit shall be done on the BSE from 15:30 hrs to 17:30 hrs, on November 30, 2011, in terms of SEBI circular IMD/FII&C/37/2009 dated February 06, 2009, subject to the modifications stated below:-
In partial amendment to clause 3 (h) of the aforesaid circular IMD/FII & C/37/2009, no single entity shall be allocated more than INR 2,000 cr. of the investment limit. Where a single entity bids on behalf of multiple entities, in terms of para 7 of SEBI circular CIR/IMD/FIIC/18 /2010 dated November 26, 2010, then such bid would be limited to INR 2,000 cr. for every such single entity.
In partial amendment to clause 3 (c) and 3(d) of the aforesaid circular IMD/FII &C/ 37/2009, the minimum amount which can be bid for shall be INR 1 cr.
Based on the assessment of the utilization of the limits to FIIs for investments in Government debt long term category, it has been decided to allocate the unutilized limits in the following manner:
In partial amendment to clause 3 (h) of the aforesaid circular IMD/FII & C/37/2009, no single entity shall be allocated more than INR 200 cr. of the investment limit. Where a single entity bids on behalf of multiple entities, in terms of para 7 of SEBI circular CIR/IMD/FIIC/18 /2010 dated November 26, 2010, then such bid would be limited to INR 200 cr. for every such single entity.
In partial amendment to clause 3 (c) and 3(d) of the aforesaid circular IMD/FII &C/ 37/2009, the minimum amount which can be bid for shall be INR 1 cr.
The fees for the bidding process shall be remitted to SEBI by the respective custodians of the entities within 3 working days after the bidding process.
Time period for utilization of above limit is as per SEBI circular IMD/FII&C/18/2010 dated November 26, 2010.
Source: SecMarx — Increase in FII debt limit in Government & Corporate debt category. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.