Sebi allows FIIs to reinvest half of investment in debt holdings

Easing norms for foreign investors, Sebi on Wednesday allowed them to re-invest half of their investments in debt holdings to the next calendar year, starting from January 2014.

Once the relaxation is in place, Foreign Institutional Investors (FIIs) and their sub-accounts can re-invest 50 per cent of their debt holdings.

"With a view to provide operational flexibility, beginning January 1, 2014, it has been decided that FIIs/sub-accounts can reinvest during each calender year to the extent of 50 per cent of their debt holding at the end of previous calender year," Sebi said in a circular.

Securities and Exchange Board of India (Sebi) has said the utilisation period for government securities and corporate debt limits, allocated through bidding process, to 30 days and 60 days, respectively.

This would be applicable for both old-and long-term infrastructure limits.

Further, Sebi has relaxed the investment limits for FIIs regarding corporate debt in the long-term infrastructure
category.

"It has been decided that FII may avail limits in the corporate debt long-term infra category without obtaining Sebi approval till the overall FII investments reaches 90 per cent of the limit...," the circular said.

Once the limit is touched, auction mechanism would be initiated for allocation of remaining limits, it added.

Sebi said it would put in place a mechanism to monitor the utilisation of the limit.

Overseas investors had poured in Rs 7,852 crore (about USD 1.5 billion) in the Indian debt market in October, the highest in eight months.

This was the highest net investment by FIIs in debt securities since February, when they had infused Rs 10,016 crore.