What changed
Earlier, only non-convertible debentures/bonds were open to these investors under the corporate debt limit. Now, non-convertible/redeemable preference shares and debentures issued under a court-approved scheme of arrangement (as per January 2014 circular) are also eligible. NRIs get both repatriation and non-repatriation options.
What it means for you
Banks and lenders can now facilitate a wider range of debt instruments for foreign investors, potentially increasing capital inflows into Indian companies. The USD 51 billion corporate debt cap remains unchanged, so this expands the product basket within the same limit. For NRIs, the dual repatriation option offers more flexibility.
What you must do
- Update internal compliance systems to include non-convertible/redeemable preference shares and debentures under the corporate debt limit for FPIs and long-term investors.
- Advise corporate clients that these instruments must be listed on recognized stock exchanges and issued under a court-approved scheme.
- Ensure NRI customers are informed about both repatriation and non-repatriation investment options for these instruments.
- Verify that all investments comply with the overall USD 51 billion corporate debt ceiling and any SEBI/RBI limits.
Who it affects
AD Category-I banks, Registered FPIs and long-term investors (SWFs, pension funds, etc.), NRIs, Indian companies issuing non-convertible/redeemable preference shares or debentures
What is the overall limit for these investments?
The total investment by FPIs, long-term investors, and NRIs in these instruments falls within the existing USD 51 billion corporate debt limit set by RBI and SEBI.
Can NRIs invest on a non-repatriation basis?
Yes, NRIs are allowed to invest in these instruments on both repatriation and non-repatriation basis, as per the circular.
Do these instruments need to be listed?
Yes, the non-convertible/redeemable preference shares or debentures must be listed on recognized stock exchanges in India.