RBI permits FPIs to invest in treasury bills
FPIs are permitted to invest in treasury bills issued by the Central Government, the RBI said while giving explanation on recent changes in investment rules for FPIs.
The foreign portfolio investors will have to make sure that their exposure in govt securities and corporate bonds of less than one year maturity will remain below 20 percent. In a notification, the Reserve Bank of India also asked the foreign portfolio investors to bring down their total exposure in debt instruments, such as Government securities, corporate bonds or state development loans, with one-year maturity to below 20 percent within 6 months.
RBI further said that the date of implementation of online monitoring of utilization of Government securities limits has been set as June first, 2018. The requirement that investment in securities of any class with residual maturity below one year should not go beyond 20% of total investment by an FPI in that category applies, on a continuous basis.
For corporate bonds, foreign portfolio investors are allowed to invest in papers with minimum residual maturity of over one year. The move is likely to bring in significant foreign fund flows into short-tenor paper, as a smart segment for foreign investors.
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