What changed
The sub-limit for long-term investors (SWFs, multilateral agencies, pension/insurance/endowment funds, foreign central banks) in government dated securities has been raised from USD 5 billion to USD 10 billion. This change is effective immediately and remains within the total USD 30 billion limit for foreign investment in government securities. All other existing conditions for such investments stay unchanged.
What it means for you
Banks and AD Category-I entities can now facilitate larger investments from long-term foreign investors in government dated securities, potentially increasing demand and lowering yields. This move signals the government's intent to attract stable, long-term capital flows into the debt market. Lenders should prepare for higher volumes of such investments and ensure compliance with SEBI's operational guidelines.
What you must do
- Update internal systems and reporting to reflect the new USD 10 billion sub-limit for long-term investors in government dated securities.
- Inform customers and constituents about the enhanced limit and ensure they are aware of SEBI's operational guidelines.
- Monitor investments to ensure they stay within the overall USD 30 billion cap and comply with all unchanged conditions.
- Coordinate with SEBI for any operational clarifications or reporting requirements.
Who it affects
AD Category-I banks, SEBI-registered long-term investors (SWFs, multilateral agencies, pension/insurance/endowment funds, foreign central banks), FIIs and QFIs investing in government securities, Indian companies issuing NCDs/bonds
What is the new sub-limit for long-term investors in government dated securities?
The sub-limit has been doubled from USD 5 billion to USD 10 billion, effective immediately, within the overall USD 30 billion cap for foreign investment in government securities.
Which investors are covered under this enhanced sub-limit?
SEBI-registered long-term investors such as Sovereign Wealth Funds (SWFs), multilateral agencies, pension funds, insurance funds, endowment funds, and foreign central banks.
Do any other conditions for investment change?
No, all other existing conditions for investment in government securities remain unchanged. Only the sub-limit for long-term investors has been increased.