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FII & Custodian Division

Investment Management Department

Email: chanda@sebi.gov.in

Website: www.sebi.gov.in

Fax No. 91 22 22870095

Circular No.IMD/FII/16/2004

November 02, 2004

To

All Foreign Institutional Investors, and

Custodians of Securities

Dear Sir / Madam,

Sub: FII Investment in Debt Securities

Vide our Circular No. IMD/CUST/ 14 /2004 dated March 19, 2004, we had informed the continuation of cap of US $1 billion for investment by 100% debt FIIs in debt securities and investment under the 70:30 route in dated Government securities and treasury bills for the year 2003-04. The Government of India has since raised the cumulative debt investment limit for the FIIs/Sub-Accounts from US $1 billion to US $1.75 billion.

In view of the above, the following shall be applicable with immediate effect:

  1. Overall investment limit under the 70:30 route in dated Government securities and treasury bills is raised from US $ 100 million to US $ 200 million.
  2. Monitoring of the above investment limit will be on daily basis and total outstanding position of all FIIs/SAs under 70:30 rote in Government securities and treasury bills will be published daily on SEBI website. Further, a ‘headroom’ of US $25million has been decided i.e. FIIs/SAs are free to invest till the total investment reaches US $175 million. Thereafter, the FIIs/SAs will have to approach SEBI for prior approval of limit allocation. Allocation of limit will be done on ‘first come-first serve’ basis. The FIIs will be granted 7 days time to invest and on the expiry of which the validity will lapse.
  3. Individual debt investment limits earlier allocated for 100% FIIs/Sub-Accounts will be realigned based on the remaining available limit of US$ 1550 million out of the overall cap of US $1.75 billion and the revised limits will be advised to the 100% debt FIIs/Sub-Accounts separately.

A copy of this circular is available at the web page "F.I.I." on our website www.sebi.gov.in . The custodians are requested to bring the contents of this circular to the notice of their FII clients.

Yours faithfully,

sd-

D.Chanda

Chief General Manager