What changed
The circular confirms that FPI investment limits for G-secs (6%) and SDLs (2%) remain unchanged for FY 2021-22. The allocation of incremental G-sec limit changes between General and Long-term sub-categories stays at 50:50. Absolute limits for each half-year (Apr-Sep 2021 and Oct 2021-Mar 2022) have been revised upward, as shown in Table 1.
What it means for you
Banks and authorized dealers can expect continued FPI inflows into government securities within the same percentage framework, providing stability for debt markets. The revised absolute limits offer clarity for planning FPI investments and managing liquidity. The unchanged structure signals RBI's intent to maintain a predictable environment for foreign investors.
What you must do
- Update internal systems with the revised FPI investment limits for G-secs and SDLs for both halves of FY 2021-22.
- Inform FPI clients and constituents about the unchanged percentage limits and the revised absolute limits.
- Ensure compliance with the Fully Accessible Route (FAR) for specified securities as per earlier circulars.
- Monitor sub-category allocations (General vs Long-term) for G-secs to avoid breaching limits.
Who it affects
Authorized Dealer Category-I banks, Foreign Portfolio Investors (FPIs), Treasury departments of banks, Custodians of securities
What are the FPI investment limits for G-secs and SDLs for FY 2021-22?
The limits remain unchanged at 6% of outstanding G-secs and 2% of outstanding SDLs. Absolute limits are revised for each half-year, as detailed in Table 1 of the circular.
How is the incremental G-sec limit allocated between sub-categories?
The allocation remains at 50:50 between the General and Long-term sub-categories for FY 2021-22.
Are there any changes to the Fully Accessible Route (FAR)?
No, all investments by eligible investors in specified securities continue to be reckoned under FAR, as per earlier circulars.