What changed
The circular confirms that the FPI investment limit in corporate bonds remains at 15% of outstanding stock for FY 2021-22. The revised limits are set at ₹5,74,263 crore for April-September 2021 and ₹6,07,039 crore for October 2021-March 2022. Limits for G-sec and SDL investments will be announced separately, with current limits continuing in the interim.
What it means for you
Banks and AD Category-I entities can expect stable FPI flows into corporate bonds, as the limit structure is unchanged. The gradual increase in corporate bond limits (from ₹5,41,488 crore to ₹6,07,039 crore by H2) reflects RBI's calibrated approach to foreign debt inflows. For lenders, this means continued foreign participation in corporate debt markets, aiding liquidity and pricing.
What you must do
- Update internal systems with the revised FPI corporate bond limits for H1 and H2 of FY 2021-22.
- Inform clients and constituents about the unchanged 15% limit and the new numerical caps.
- Monitor RBI announcements for G-sec and SDL limit revisions, as current limits remain applicable.
- Ensure compliance with FEMA regulations and the Debt Instruments Regulations, 2019.
Who it affects
Authorised Dealer Category-I banks, Foreign Portfolio Investors, Corporate bond issuers and market participants, Treasury and compliance teams at banks
What is the FPI investment limit for corporate bonds for FY 2021-22?
The limit remains at 15% of outstanding stock of securities. The revised numerical limits are ₹5,74,263 crore for April-September 2021 and ₹6,07,039 crore for October 2021-March 2022.
Are there any changes to G-sec and SDL limits?
No, the circular states that revised limits for G-sec and SDL will be advised separately. Current limits (G-sec General ₹2,34,531 crore, G-sec Long Term ₹1,03,531 crore, SDL General ₹67,630 crore, SDL Long Term ₹7,100 crore) continue until further notice.
Which banks are primarily responsible for implementing this circular?
Authorised Dealer Category-I (AD Category-I) banks are directed to bring the contents to the notice of their constituents and customers.