The Reserve Bank of India has vide circular No. 5 dated September 22, 2017, decided to review the investment in corporate debt securities by Foreign Portfolio Investors ("FPIs"). Currently, the limit for investment by FPIs in corporate bonds is INR 244,323 crore. This includes issuance of Rupee denominated bonds overseas (Masala Bonds) by resident entities of INR 44,001 crore (including pipeline). The Masala Bonds are presently reckoned both under Combined Corporate Debt Limit (CCDL) for FPI and External Commercial Borrowings (ECBs). On a review, and to further harmonise norms for Masala Bonds issuance with the ECB guidelines, the following changes are made:
- With effect from October 3, 2017, Masala bonds will no longer form a part of the limit for FPI investments in corporate bonds. They will form a part of the ECBs and will be monitored accordingly.
- The amount of INR 44,001 crore arising from shifting of Masala bonds will be released for FPI investment in corporate bonds over the next two quarters as specified in the aforementioned circular.
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