The Reserve Bank of India (RBI) on Wednesday readjusted the investment limits of various kinds of foreign investors, allowing medium-term investors to invest an additional $5 billion. Foreign institutional investors (FII), who typically take positions on Indian debt instruments maturing within one to three years, have exhausted 99.6% of their investment limit of $20 billion.
To encourage more foreign participation in Indian debt, RBI increased the FII limit to $25 billion and reduced the long-term foreign investors’ limit to $5 billion. However, RBI clarified, that there will be no lock-in period and foreign investors “shall be free to sell the securities (including that are presently held with less than three years of residual maturity) to the domestic investors.”
