New Delhi: To arrest the rupee slide, RBI today increased FII limit in government bonds to USD 20 billion, while allowing up to USD 10 billion from overseas borrowings by India Inc for refinancing rupee loan.
Long term investors like Sovereign Wealth Funds (SWFs), multilateral agencies, endowment funds, insurance funds, pension funds and foreign central banks would be allowed to invest in government debts up to USD 20 billion, RBI said in a notification.
The decisions have been taken "in consultation with the government," RBI said, adding that they will widen foreign investor base for government securities (G-Secs).
"It has been decided to allow Indian companies in manufacturing and infrastructure sector and having foreign exchange earnings to avail of external commercial borrowing (ECB) for repayment of outstanding rupee loans towards capital expenditure and/or fresh rupee capital expenditure under approval route. The overall ceiling for such ECBs would be USD 10 billion," the central bank said.
It further said the existing limit for investment by foreign institutional investors (FIIs) in G-Secs has been enhanced by USD 5 billion.
"This would take the overall limit for FII investment in G-Secs from USD 15 billion to USD 20 billion. The sub-limit of USD 10 billion (existing USD 5 billion with residual maturity of 5 years and additional limit of USD 5 billion) would have the residual maturity of three years," RBI said.
Also, the terms and conditions for the scheme for FII investment in infrastructure debt and the scheme for non- resident investment in Infrastructure Development Funds (IDFs) have been further rationalised in terms of lock-in period and residual maturity.
Further, the conditions for investment by individual foreign investors have been relaxed in Mutual Funds. MORE