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Informist, Thursday, Apr. 3, 2025

 

--RBI keeps FPI invest limit for gilt, state bond and corp bonds unch FY26 

 

MUMBAI – The Reserve Bank of India Thursday notified investment limits for foreign portfolio investors in India's debt markets for the current financial year started April, leaving the percentage investment limits in all market segments unchanged.

 

The investment limits will remain unchanged at 6% of outstanding stocks for government securities, 2% for state government securities and 15% for corporate bonds, the central bank said in a notification. The RBI had kept the limits unchanged last year as well.

 

The increase in limits in absolute terms will be split equally between the 'general' and 'long-term' categories for gilts, while the entire increase in limits for state bonds will be added to the "general" category, the RBI said.

 

FPI investment limits for gilts in the general category will increase by around INR 102.52 billion each in Apr-Sept and Oct-Mar to reach INR 2.89 trillion. The current FPI limit is at INR 2.69 trillion. Investment limits in long-term government securities will also increase by a similar amount in the first and second half of the year to reach INR 1.58 trillion from the current limit of INR 1.38 trillion. According to data on the Clearing Corp of India Ltd., FPIs have used nearly 22% of the limit for government securities in the general category as of the end of March.

 

FPIs have used 3.5% of the total limit allowed for the long-term segment of gilts and 2.5% of state bond holdings. The investment limit in state bonds in the general category will increase by around INR 84.96 billion each in Apr-Sept and Oct-Mar to hit INR 1.35 trillion, the RBI said. The investment limit for long-term state bonds will remain unchanged at INR 71 billion. 

 

Investment limits in corporate bonds will rise by INR 586.66 billion each in Apr-Sept and in Oct-Mar to reach INR 8.81 trillion from the current limit of INR 7.64 trillion. The central bank gave an additional dispensation for credit default swaps. "... the aggregate limit of the notional amount of Credit Default Swaps sold by FPIs shall be 5% of the outstanding stock of corporate bonds," the RBI said. Accordingly, an additional limit of INR 2.94 trillion is set out for FY26, it said.  End

 

US$1 = INR 85.43

 

Reported by Srijita Bose

Edited by Saji George Titus

 

 

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