FIIs/QFIs shall hereafter be permitted to invest in Government Debt without purchasing debt limits till the overall investment reaches 90%. Once this 90% limit is reached, auction mechanism shall be initiated for allocation of the remaining limits, as currently in place for FII investments in Corporate Debt. Presently FIIs/QFIs have to purchase the debt limits through the auction mechanism.
SEBI has issued a circular CIR/IMD/FIIC/15/2013 dated September 13, 2013 regarding Government Debt Limit Allocation Mechanism for FIIs/QFIs.
The circular is available on the SEBI website : www.sebi.gov.in