All Foreign Portfolio Investors
through their designated Custodians of Securities
The Depositories (NSDL and CDSL)
Sir / Madam,
Sub: Change in
investment conditions for FPI investments in Government Debt securities
1. Pursuant to the announcements made in the Sixth
Bi-monthly Monetary Policy Statement, 2014-15 dated February 03, 2015 by the
Reserve Bank of India (RBI), it has been decided that investment of coupons in
Government securities will be enabled even when the existing limits for FPIs
are fully utilised.
2. Accordingly, FPIs shall be permitted to invest in
Government securities, the coupons received on their investments in Government
securities. Such investments shall be kept outside the applicable limit
(currently USD 30 billion) for investments by FPIs in Government securities.
3. For the purpose of investment of coupons, the
FPIs shall have an investment period of 5 working days from the date of receipt
of the coupon. A re-investment facility of 5 working days shall be provided on
the Government securities that have been purchased by utilizing the coupons.
All other existing conditions for investment by FPIs in the Government
securities market remain unchanged for this additional facility as well. It is
further clarified that coupons received on these Government securities purchased
by investment of coupons shall also have the same facility.
4. The coupons invested in purchasing Government
securities shall be classified into a separate investment category which is
over and above the USD 30 billion Government debt limit. The depositories shall
put in place the necessary systems for the daily reporting by the custodians of
the FPIs and shall also disseminate this coupon investment data along with the
daily debt utilization data.
This circular shall come into effect immediately.
This circular is issued in exercise of powers conferred under Section 11 (1) of
the Securities and Exchange Board of India Act, 1992.
A copy of this circular is available at the web
page “Circulars” on our website www.sebi.gov.in. Custodians are requested to
bring the contents of this circular to the notice of their FPI clients.