RBI/2011-12/244
A.P. (DIR Series) Circular No. 42
November 03, 2011
To,
All Category – I Authorized Dealer banks
Madam / Sir,
Foreign investment in India by SEBI registered FIIs in other securities
Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to
A.P.(DIR Series) Circular No.55 dated April 29, 2011, in terms of which the
limit for FII investment in non-convertible debentures / bonds issued by Indian
companies in the infrastructure sector was enhanced from USD 5 billion to USD 25
billion. This was subject to the conditions that such instruments shall have a
residual maturity of five years and above, the investments would have a
lock-in-period of three years and ‘infrastructure’ would be as defined under the
extant External Commercial Borrowings (ECB) policy. Attention of the AD
Category-I banks is also invited to
A.P. (DIR Series) Circular No.8 dated August
9, 2011, in terms of which Qualified Foreign Investors as defined therein (QFIs)
were allowed to invest in units of Mutual Funds debt schemes upto a limit of USD
three billion within the overall limit of USD 25 billion for FII investment in
non-convertible debentures / bonds issued by Indian companies in the
infrastructure sector.
- On a review it has been decided as under :
- FIIs would also be allowed to invest in non-convertible debentures / bonds
issued by Non-Banking Financial Companies categorized as ‘Infrastructure Finance
Companies’(IFCs) by the Reserve Bank of India within the overall limit of USD 25
billion.
- The lock-in-period of three years for FII investment stands reduced to one
year up to an amount of USD 5 billion within the overall limit of USD 25
billion. This lock-in-period shall be computed from the time of first purchase
by FIIs.
- The residual maturity of five years and above stipulated would now onwards
refer to the original maturity of the instrument at the time of first purchase
by an FII.
- The above changes at (i) and (iii) above would also apply for QFI investment
in units of Mutual Fund debt schemes within the limit of USD three billion.
- Necessary amendments to the Foreign Exchange Management (Transfer of Issue of
Security by a Person Resident outside India) Regulations, 2000 notified vide
Notification No. FEMA 20/2000-RB dated May 3, 2000 are being notified
separately.
- AD Category – I banks may bring the contents of the circular to the notice of
their constituents.
- The directions contained in this circular have been issued under Sections
10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and
are without prejudice to permissions / approvals, if any, required under any
other law.
Yours faithfully,
(Meena Hemachandra)
Chief General Manager-in- Charge