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A.P. (DIR Series) Circular No. 42, dated 3-11-2011 — Foreign investment in India by SEBI registered FIIs in other securities.
December2011
A.P. (DIR Series) Circular No. 42, dated 3-11-2011 — Foreign investment in India by SEBI registered FIIs in other securities.
By Gaurang Gandhi, Chartered Accountant
Reading Time 2 mins
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Presently, Foreign Institutional Investors (FII) are allowed to invest up to INR1,545 billion in in nonconvertible debentures/bonds issued by Indian companies in the infrastructure sector, provided the said instruments had a residual maturity of five years and the investments would have a lock-in-period of three years. Similarly, Qualified Foreign Investors (QFI) are allowed to invest in units of Mutual Funds debt schemes up to a limit of INR185 billion within the overall limit of INR1,545 billion for FII investment in non-convertible debentures/ bonds issued by Indian companies in the infrastructure sector.
This Circular has relaxed the requirements as under:
FII:
(i) FII would, in addition to investment in infrastructure companies, also be allowed to invest in non-convertible debentures/bonds issued by Non-Banking Financial Companies categorised as ‘Infrastructure Finance Companies’ (IFC) by the Reserve Bank of India within the overall limit of INR1,545 billion.
(ii) The lock-in-period of three years for FII investment stands reduced to one year up to an amount of INR309 billion within the overall limit of INR1,545 billion. This lock-in-period shall be computed from the time of first purchase by FII.
(iii) The residual maturity of five years would now onwards refer to the original maturity of the instrument at the time of first purchase by an FII.
QFI:
(i) QFI would, in addition to investment in Mutual Fund debt schemes, also be allowed to invest in non-convertible debentures/bonds issued by Non-Banking Financial Companies categorised as ‘Infrastructure Finance Companies’ (IFC) by the Reserve Bank of India within the overall limit of INR185 billion.
(ii) The residual maturity of five years would now onwards refer to the original maturity of the instrument at the time of first purchase by a QFI.
