What changed
RBI merged the earlier sub-limits for FII and long-term investor debt into two categories: Government Debt (USD 25 billion, including Treasury Bills up to USD 5.5 billion) and Corporate Debt (USD 51 billion, including Commercial Papers up to USD 3.5 billion). The previous sub-limits for infrastructure and non-infrastructure sectors, as well as QFI limits, are now consolidated under the corporate debt cap. NRIs remain exempt from these limits.
What it means for you
For banks and lenders, this consolidation reduces complexity in monitoring multiple sub-limits for FII debt investments. It allows easier tracking of overall exposure to government and corporate debt. The unified limits may also encourage more streamlined investment flows, as investors no longer need to navigate separate sub-caps.
What you must do
- Update internal systems to reflect the new merged limits: USD 25 billion for Government Debt and USD 51 billion for Corporate Debt.
- Ensure compliance with the revised Treasury Bill sub-limit of USD 5.5 billion and Commercial Paper sub-limit of USD 3.5 billion.
- Communicate the changes to constituents and customers, as directed by RBI.
- Monitor SEBI operational guidelines for detailed implementation procedures.
Who it affects
AD Category-I banks, SEBI-registered FIIs, Qualified Foreign Investors (QFIs), Long-term investors (SWFs, multilateral agencies, pension/insurance/endowment funds, foreign central banks), Indian companies issuing NCDs/bonds
What are the new debt limits for FIIs effective April 1, 2013?
The limits are USD 25 billion for Government securities (including Treasury Bills) and USD 51 billion for corporate debt (including Commercial Papers).
Are NRIs affected by these new limits?
No, NRIs remain exempt from these limits and continue to be regulated by existing guidelines.
What sub-limits apply within the new categories?
Within the Government Debt limit, Treasury Bills are capped at USD 5.5 billion. Within the Corporate Debt limit, Commercial Papers are capped at USD 3.5 billion.