A. P. (DIR Series) Circular No. 73 dated February 6, 2015

Foreign investment in India by Foreign Portfolio Investors This circular clarifies the queries received by RBI with respect to investment by Foreign Portfolio Investors (FPI). The queries and the respective clarifications are as under: –

a. Query: The applicability of the directions to investment by FPIs in commercial papers (CPs). Clarification: In terms of the aforesaid directions, any fresh investments shall be permitted in any type of debt instrument in India with a minimum residual maturity of three years. Accordingly, FPIs shall not be allowed to make any further investment in CPs.
b. Query: The applicability of these guidelines on debt instruments having maturity of three years and over but with optionality clause of less than three years. Clarification: FPIs shall not be allowed to make any further investments in debt instruments having minimum initial / residual maturity of three years with optionality clause exercisable within three years.
c. Query: The applicability of these guidelines on amortised debt instruments having average maturity of three years and above. Clarification: FPIs shall be permitted to invest in amortised debt instruments provided the duration of the instrument is three years and above.