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Foreign portfolio investors (FPIs) have given a thumbs up to the increase in investment limits offered to them by the RBI in its monetary policy on September 29.
Just two days after the limits were hiked on October 12, FPIs bought government securities (G-Secs) worth ₹5,550 crore and State Development Loans (SDL) worth ₹2,853 crore.
The auction for FPI debt limits for ₹5,600 crore held on the BSE on October 12 was also fully allocated with 32 successful bids out of the total 88 received.
The lowest successful bid was 66 bps and the highest bid was 85 bps. RBI, on September 29, offered FPIs an additional investment limit of ₹1.2 lakh crore in G-Secs in a phased manner by March, 2018, over and above the the existing limit of ₹1,53,500 crore.
RBI said foreign portfolio investments will be denominated in rupees instead of dollars and the cap will be raised in phases to 5 per cent of outstanding debt by March, 2018.
RBI also unveiled separate investment limits for FPIs in SDL in a phased manner (at 2 per cent of outstanding stock) unlocking an additional limit of about ₹50,000 crore by March, 2018.
The increase in limits will be announced every half-year, in March and September, and released every quarter. However, for the current fiscal limits would be increased in two tranches — October 12, 2015, and January 1, 2016.
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