Mumbai: The Reserve Bank of India (RBI) on Friday withdrew the 20 percent limit on investments by foreign portfolio investors (FPIs) in corporate bonds of an entity with a view to encourage more foreign investments.
As part of the review of the FPI investment in corporate debt undertaken in April 2018, it was stipulated that no FPI should have an exposure of more than 20 percent of its corporate bond portfolio to a single corporate (including exposure to entities related to the corporate).
While the provision was aimed at incentivising FPIs to maintain a portfolio of assets, market feedback indicates that FPIs have been constrained by this stipulation, the RBI said.
"...in order to encourage a wider spectrum of investors to access the Indian corporate debt market, it has been decided to withdraw this provision with immediate effect," the central bank said.
The RBI said the directions in this regard have been issued the Foreign Exchange Management Act.
Firstpost is now on WhatsApp. For the latest analysis, commentary and news updates, sign up for our WhatsApp services. Just go to Firstpost.com/Whatsapp and hit the Subscribe button.
Updated Date: Feb 15, 2019 19:20:44 IST