Easing rules for investments from the foreign portfolio investors (FPIs), the Reserve Bank of India (RBI) has permitted them to invest in Treasury Bills or T-Bills issued by the Central Government. However, the FPIs will have to ensure that their exposure in government securities as well as corporate bonds of less than one year maturity shall not exceed 20 percent of total investment. It also asked the investors to bring down their total exposure in debt instruments (G-secs, state development loans or, corporate bonds) with one-year maturity to below 20 percent within six months.
The central bank has stated that the implementation date of online monitoring of utilisation of G-sec limits has been set as June 1, 2018. The requirement that investment in securities of any category with residual maturity below one year should not exceed 20 percent of total investment by an FPI in that category applies, on a continuous basis. It added that all securities with residual maturity of less than one year will be reckoned for the 20 percent limit, regardless of the maturity of the security at the time of purchase by the FPI.
The RBI further said that if there are investments in securities with less than one year residual maturity as on May 2, 2018, and it constitutes more than 20% of the total investment in any category, the FPI will have to bring such share below 20% within a period of six months from the date of the circular. Besides, it noted that the FPI should ensure that no further additions are made to the portfolio of securities with residual maturity of less than one year as on May 2, 2018.