What changed
The limits for FPI investment in government securities (6%), state government securities (2%), and corporate bonds (15%) remain unchanged for FY 2024-25. The allocation of incremental g-sec limit increases between General and Long-term sub-categories stays at 50:50. The entire increase in SGS limits has been added to the General sub-category.
What it means for you
Banks can expect continued FPI participation in Indian debt markets with stable limits, supporting liquidity. The unchanged limits provide predictability for bond market planning. The additional SGS limit allocation to General sub-category may increase demand for state government securities.
What you must do
- Update your systems with the revised absolute FPI investment limits for each half-year as per Table 1.
- Inform AD Category-I bank customers about the unchanged percentage limits and revised absolute figures.
- Monitor FPI investment flows against the new limits for g-secs, SGSs, and corporate bonds.
- Note the additional Credit Default Swap limit of ₹2,54,500 crore for FPIs for 2024-25.
Who it affects
AD Category-I banks, Foreign Portfolio Investors, Treasury departments of banks, Debt market participants
What is the Credit Default Swap limit for FPIs?
The aggregate notional amount of CDS sold by FPIs is set at 5% of the outstanding stock of corporate bonds. For 2024-25, an additional limit of ₹2,54,500 crore is set out.