RBI allow $5 billion more investment to FPIs
On Thursday, the total investment limits offered at an auction organised in Mumbai were Rs 3,117 crore (around $520 million) and FPIs (Foreign Portfolio Investors) were ready to pay premium as high as 8 bps. The Securities and Exchange Board of India (SEBI) auctions the investment limits in government bonds once foreign investors have exhausted 90 % of the $30-billion limit available to them.
The investors had exhausted more than 90 percent of their investment limits in government bonds by June 9. Post that period the remaining limits were put up for auction on June 11. The good news is that the auction saw a strong demand. Looking at the demand, the Reserve Bank of India (RBI) tweaked norms to allow $5 billion more investment to FPIs. This raised limit was quickly mopped up by FPIs. In fact, the auction in July saw FPIs pay a premium of as high as 7.25 bps, the highest in a year, to acquire fresh limits.
FPIs are picking up bonds issued by the public sector companies such as Rural Electrification Corp, Power Finance Corp and other top-rated non-banking finance companies such as Housing Development and Finance Corp (HDFC), LIC Housing Finance and Mahindra Finance.
There is a lot of buzz in the investment world regarding this and some investors are also buying bonds rated AA and issued by non-banking finance companies.
Source- The Financial Express
Foreign Portfolio Investors, FPIs, Housing Development and Finance Corp, Power Finance Corp, Rural Electrification Corp, SEBI, Securities and Exchange Board of India
