Government may tweak sub-limits on debt investments - NDTV

The content may have been removed, or is temporarily unavailable. We apologize for the inconvenience. Please try again later. New Delhi: The Finance Ministry, in consultation with the Reserve Bank of India, has suggested a rejig of the investment caps of government securities and corporate bonds to encourage FII inflows. The government has a $40 billion debt window for FIIs in government securities and corporate bonds, out of which $10 billion each for government securities and corporate bonds are short-term investment buckets, which are close to their quota limit. The government is likely to add another $5 billion each now to the short-term existing caps, both for g-secs and corporate bonds, so that the investment sub-cap stands revised at $15 billion each, but within the overall $40 billion cap. Government securities and corporate bonds without any lock-in or residual maturity are typically the star attractions for FIIs. And in this fiscal up to September, FIIs have nearly exhausted their investment space of $10 billion each in the short term securities. S eptember data showed FII investments in short-term government securities at over 91 per cent, while in the short-term corporate bonds around 83 per cent of the investment cap had been exhausted. In comparison, the longer end of the securities like in government securities for instance, FIIs had invested less than 50 per cent of the subscription limit up to September end. The government is hopeful the additional $10 billion window for FII debt will help meet its current account deficit pegged at $70 billion for the current fiscal year, or 3.7 per cent of the GDP. The overall debt window for short- and long-term investments by FIIs, mutual funds and QFIs all put together is $65 billion. This $65 billion ceiling also encompasses a separate $25 billion bucket for investments in long-term infrastructure bonds, which has so far attracted little investment. via Business - Google News

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