Investment by Foreign Portfolio Investors (FPI) in Debt

Reserve Bank of India (RBI) vide RBI/2018-19/123 A.P. (DIR Series) Circular No. 19 dated 15th February 2019 have made an amendment relating to the investment by Foreign Portfolio Investors (FPI) in Debt.

As per RBI/2017-18/199 A.P. (DIR Series) Circular No. 31 dated June 15, 2018, FPI investment in corporate bonds (under Schedule 5 of FEMA 20(R)/ 2017-RB) shall be subject to the following requirements:

1.  Investment by any FPI, including investments by related FPIs, shall not exceed 50% of any issue of a corporate bond. In case an FPI, including related FPIs, has invested in more than 50% of any single issue, it shall not make further investments in that issue until this stipulation is met.
2. No FPI shall have an exposure of more than 20% of its corporate bond portfolio to a single corporate (including exposure to entities related to the corporate).

RBI has decided to withdraw the point (ii) stated above i.e., limit of FPI investment of 20% of its corporate bond portfolio to a single corporate with effect from 15th February 2019 to encourage a wider spectrum of investors to access the Indian corporate debt market.