FII & Custodian Division
Investment Management Department
Fax No. 91 22 22870095
Circular No. IMD/FII/19/2005
All Foreign Institutional Investors, and
Custodians of Securities
Sub: FII investments in Debt Securities
Please refer to our Circular No.
In view of the above, the following shall be applicable with immediate effect:
investment limit under the 70:30 route in dated Government securities and
T-Bills shall remain at USD 200 million. Monitoring and allocation of
investment limit shall remain the same as mentioned in our Circular No.
2. It may be recalled that, earlier, both Government and Corporate debt investments of 100% debt FIIs/ Sub Accounts were reckoned within the limit of USD 1.55 billion. Henceforth, pursuant to the clarification from the Ministry of Finance, investments in Government debt only shall be reckoned within the sub ceiling of USD 1.55 billion. The FII investments in corporate debt shall now be, therefore,
reckoned within the sub ceiling of USD 0.5 billion. To conform to the sub ceiling of USD 0.5 billion, there shall be no further investment or rollover of existing position in corporate debt by both 100% debt and general 70:30 FIIs/ Sub Accounts till the holdings fall within the stipulated cap of USD 0.5 billion. Subsequently, the limit of USD 0.5 billion shall be allocated among 100% debt and 70:30 FIIs/ Sub Accounts.
3. Additionally, any further investment in Government debt within the sub ceiling of USD 1.55 billion may be undertaken by 100% debt FIIs/ Sub Accounts only up to the extent of the unutilized portion of their notified limits. The redeemed portion of the corporate debt within the limit can be utilized for investment in Government debt only. However, those 100% debt FIIs/ Sub Accounts, whose holdings, as on date, are in excess of the limits allocated to them, should not undertake any fresh investment or rollover till their total holdings fall within the limits communicated to them earlier.
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.
Chief General Manager
CC: The Chief General Manager, Exchange Control Department, Reserve Bank of India,