RBI Raises FPI Investment Limit in Government and Corporate bonds from 20% to 30%
- The Reserve Bank of India (RBI) has raised the investment limit for Foreign Portfolio Investor (FPI) in government and corporate bonds, in a move to bring in more foreign funds in the country.
- Under the new norms, the short term investment limit for FPI has now been increased from 20 percent to 30 percent for both, government and corporate bonds.
- Until now, short-term investments by a foreign portfolio investor (FPI) could not exceed 20 percent of the total investment of that FPI in either central government securities (including treasury bills) or state development loans or even in corporate bonds.
- Besides this, RBI has also made relaxation in the Voluntary Retention Route (VRR) for FPI investments in debt.
- The investment cap through VRR has been doubled to Rs 1.5 lakh crore, from 75,000 crore.
- Additionally, FPIs are now also allowed to invest in exchange-traded funds (ETF), that invest only in debt instruments.
Points to Remember:
- Limit that FPI can invest in government and corporate bonds
- What is the Investment cap set by RBI for FPI through VRR?
- Full forms of FPI, VRR and ETF