FPI - Investment in debt and voluntary retention route - further relaxations introduced

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The short term investment limits for FPIs in i) Central Government Securities (including Treasury Bills), ii) State Development Loans and iii) Corporate bonds has been increased from the erstwhile limit of 20% to 30% of the total investment of the FPI in the Central Government Securities (including Treasury Bills) or State Development Loans or Corporate bonds, as the case may be; and

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Similar to exemptions from short term investment limits afforded to FPI in case of investment in security receipts, the FPI Investment circular has extended the said exemption to FPI investment in debt instruments issued by asset reconstruction companies and debt instruments issued by an entity under the corporate insolvency resolution process as per the resolution plan approved by the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016.

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The cap on investment under VRR has been increased to INR 1,50,000 crores from INR. 75,000 crores.

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FPIs that have been allotted investment limits under VRR may, at their discretion, transfer their investments made under the General Investment Limit available to FPI to VRR.

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The scope of instruments that FPIs can invest in has been expanded under VRR to also include Exchange Traded Funds that invest only in debt instruments.