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1 Oct 2015

The Working for FII Limits in Gsec and SDL post RBI 29th September Policy Review

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In December 2017 FII limits in central government securities has increased by Rs 64 billion and by Rs 58 billion for State Development Loans (SDL).

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Arjun Parthasarathy

In December 2017 FII limits in central government securities has increased  by Rs 64 billion and by Rs 58 billion for State Development Loans (SDL). Since October 2015 G-sec limit has increased by Rs 1029 billion to Rs 2564 billion and utilised limit is 91% at Rs 2334 billion. SDL,limit has increased by Rs 393 billion of which 10.80%  is utilised. SDL investments stand at Rs 48.75 billion.

RBI announced in its 29th September 2015 policy review, revised FII limits in government bonds and SDL.

RBI has set out new limits for FII investments in government bonds, which will now be denominated in INR and will have to be in bonds with a minimum maturity of 3 years. Total FII limits in government bonds will be 5% of total outstanding government bonds by March 2017. The current outstanding is INR 45.49 trillion. The target limit of 5% of total outstanding stock of government securities will release Rs 1.2 trillion of limits to FIIs from current outstanding of Rs 1.5 trillion.

The limits for FY16 were released in October 2015 and January 2015. The amounts released in each tranche for government bonds was Rs 130 billion composed of Rs 75 billion for long term investors and Rs 55 billion for others.

FII limits for SDL (State development Loans) will be an additional 2% of total outstanding stock of SDL by March 2018. Current outstanding stock of SDL is around Rs 12 trillion. SDL limits to be released this fiscal year are Rs 70 billion for all investors.

Table 1 gives the workings of the new FII limits in Government Bonds and SDLs

 

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