New Delhi, Sep 23 (IANS) The government Thursday raised the cap on foreign fund participation in its securities and corporate bonds to augment investment in the infrastructure sector and develop the bond market in the country.
The current limit of foreign institutional investors (FII) investment in government securities has been increased by $5 billion. The cap now stands at $10 billion, said a finance ministry statement.
The incremental limit of $5 billion in government securities can be invested over a period of five years.
The limit of FII investment in corporate bonds has also been raised by $5 billion increasing the cap to $20 billion. The increased investment limit will have to be invested in corporate bonds over five years issued by companies in infrastructure sector.
‘The enhancement of the FII investment cap would provide avenues for increased FII investments in debt securities, help investment in infrastructure sector and the development of government securities and corporate bond markets in the country,’ the statement added.
The upward revision has been done to meet the need for additional financial resources for India’s infrastructure sector while balancing its monetary policy.
The announcement came after the government decided to cut its borrowing in the second half of the fiscal by Rs.10,000 crore to reduce fiscal deficit. The overall borrowing during the fiscal will now be around Rs.447,000 crore.
