INSUBCONTINENT EXCLUSIVE:
MUMBAI: The Reserve Bank of India has eased investment norms for overseas investors after weekly sovereign bond auctions partially failed to
elicit investor interest.
The central bank has withdrawn an investment cap that bars foreign portfolio investors (FPIs) from investing in
Indian bonds with less than three-year maturity, a move that is expected to increase more overseas investor participation in domestic bond
notification Friday.
Moreover, they can even invest one-fifth of their total investment in less than one-year residual maturity papers.
At
the same time, FPIs can now own sovereign securities 30 per cent of the outstanding or available stock compared with 20 per cent, earmarked
investors cannot invest more than half of any corporate bond issuance.
Last Thursday, a five-year series bond was devolved on bond houses
for nearly Rs 3,000 out of Rs 12,000 crore up for weekly sale
help create additional demand from overseas investors
Ratings Research.
The RBI has also done away with another the practice of auctioning limit once the overall FPI limit crosses 90 per cent,
a move that will give freehand to those investors to lap up domestic debt securities quickly.
Earlier in April, the RBI said that FPIs would
be allowed to invest up to 5.5 per cent of outstanding stock of government securities (G-secs) in 2018-19 and 6 per cent of outstanding
stock of securities in 2019-20.
The RBI said that ploughing-back of interest income from G-secs in the same instrument that had no limits
will now be included within the overall G-sec limits for FY19 and FY20.
