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January 2012

A.P. (DIR Series) Circular No. 49, dated 22-11-2011 — Foreign investments in Infrastructure Debt Funds.

By Gaurang Gandhi, Chartered Accountant
Reading Time 2 mins
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This Circular permits eligible non-resident investors, subject to certain terms and conditions, to invest in Infrastructure Debt Funds (IDF) as shown in tabular form on next page: The original/initial maturity period of the securities must be 5 years with a lock-in period of 3 years. However, transfer between eligible nonresident investors is permitted during this period.

Eligible instruments/securities for non-resident investment in IDFs
Eligible non-resident investor Eligible instruments
(i) SEBI-registered eligible non-resident investors Foreign currency and Rupee denominated bonds and
in IDF — Sovereign Wealth Funds, Multilateral rupee denominated units issued by IDF
Agencies, Pension Funds, Insurance Funds and
Endowment Funds
(ii) SEBI-registered FII who qualify as (i) above Foreign currency and Rupee denominated bonds and rupee denominated units issued by IDF
(iii) SEBI-registered FII who do not qualify as (i) Rupee denominated bonds and units issued by IDF
above
(iv) NRI Rupee denominated bonds and units issued by IDF
Investments by non-residents, other than NRI, must be within the overall cap/limit of US $ 10 billion within the overall cap of US $ 25 billion for FII investment in bonds/non-convertible debentures issued by Indian companies in the infrastructure sector or by infrastructure finance companies. There is no cap/limit on NRI investment IDF by way of Rupee denominated bonds/units. Foreign currency denominated bonds must comply with the External Commercial Borrowing guidelines/regulations.

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