In an attempt to boost the Indian economy, RBI today introduced certain liberalization measures. Investment limit for foreign institutional investors -FIIs in government securities (G-Secs) has been enhanced by 5 billion US dollars.

The measure is only for FIIs that are registered with Securities and Exchange Board of India, SEBI. This would take the overall limit for FII investment in government securities from 15 billion dollars to 20 billion dollars. The sub-limit of 10 billion dollars would have the residual maturity of three years

Meanwhile, in order to enable more foreign agencies to invest in government securities, the RBI has decided to allow long term investors like Sovereign Wealth Funds, multilateral agencies, endowment funds, insurance funds, pension funds and foreign central banks to be registered with SEBI.

The terms and conditions for the scheme for FII investment in infrastructure debt and the scheme for non-resident investment in Infrastructure Development Funds (IDFs) have been further rationalised in terms of lock-in period and residual maturity.

RBI has also allowed Indian companies in manufacturing and infrastructure sector to avail external commercial borrowing (ECB) for repayment of outstanding loans towards capital expenditure. The overall ceiling for such ECBs would be 10 billion dollars.

Further, Qualified Foreign Investors have been allowed to invest in mutual fund schemes that hold at least 25 per cent of their assets in infrastructure sector under the current 3 billion dollar sub-limit for investment in mutual funds related to infrastructure.

RBI has introduced these measures in consultation with the Union Government with an aim to curb rupee depreciation and improve the market sentiment.News Content