{"id":4221,"date":"2021-04-19T06:20:51","date_gmt":"2021-04-19T06:20:51","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=4221"},"modified":"2021-04-19T06:21:45","modified_gmt":"2021-04-19T06:21:45","slug":"limits-for-fpi-investment-in-corporate-bonds","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/limits-for-fpi-investment-in-corporate-bonds\/","title":{"rendered":"Limits for FPI Investment in Corporate Bonds for F.Y. 2021-22 by RBI"},"content":{"rendered":"\n<p class=\"has-drop-cap\">On March 31, 2021, the Reserve Bank of India (RBI) has released an RBI\/2020-21\/116 A.P. (DIR Series) Circular No. 14 for the Limits for FPI Investment in Corporate bonds for F.Y. 2021-22. This circular states that the limits for Foreign Portfolio Investment in Corporate bonds will remain unchanged at 15% of the outstanding stock of securities for Financial Year 2021-22. In this blog, we will discuss the Limits for FPI Investment in Corporate bonds for F.Y. 2021-22.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a54d96bd64f6\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a54d96bd64f6\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/limits-for-fpi-investment-in-corporate-bonds\/#Lets_Understand_the_Concept_of_FPI_Foreign_Portfolio_Investment\" title=\"Let\u2019s Understand the Concept of FPI (Foreign Portfolio Investment)\">Let\u2019s Understand the Concept of FPI (Foreign Portfolio Investment)<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/limits-for-fpi-investment-in-corporate-bonds\/#Advantages_of_FPI\" title=\"Advantages of FPI\">Advantages of FPI<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/limits-for-fpi-investment-in-corporate-bonds\/#What_are_the_Limits_for_FPI_Investment_in_Corporate_bonds_for_FY_2021-22\" title=\"What are the Limits for FPI Investment in Corporate bonds for F.Y. 2021-22?\">What are the Limits for FPI Investment in Corporate bonds for F.Y. 2021-22?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/limits-for-fpi-investment-in-corporate-bonds\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/limits-for-fpi-investment-in-corporate-bonds\/#Official_Circular_Copy_of_the_Limits_for_FPI_Investment_in_Corporate_bonds_for_FY_2021-22_by_RBI\" title=\"Official Circular Copy of the Limits for FPI Investment in Corporate bonds for F.Y. 2021-22 by RBI\">Official Circular Copy of the Limits for FPI Investment in Corporate bonds for F.Y. 2021-22 by RBI<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Lets_Understand_the_Concept_of_FPI_Foreign_Portfolio_Investment\"><\/span>Let\u2019s Understand the Concept of FPI (Foreign Portfolio Investment)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Before we discuss about the Limits for FPI Investment in Corporate bonds for F.Y. 2021-22, let us first understand the meaning of FPI. FPI is becoming progressively more common as a means of portfolio diversification. Habitually, <strong>Foreign Portfolio Investments<\/strong><sup><a rel=\"noreferrer noopener\" href=\"https:\/\/en.wikipedia.org\/wiki\/Foreign_portfolio_investment\" target=\"_blank\"><strong>[1]<\/strong><\/a><\/sup> include securities and alternative foreign financial assets that are inertly held by a foreign investor.<\/p>\n\n\n\n<p>Foreign\nPortfolio Investment is well-known among various types of investors. Most\ncommon transactors of FPI consists:<\/p>\n\n\n\n<p>\u2022&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Companies;<\/p>\n\n\n\n<p>\u2022&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Individuals;<\/p>\n\n\n\n<p>\u2022&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Foreign Governments.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Advantages_of_FPI\"><\/span>Advantages of FPI<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ol><li><strong><em>Modification of Portfolio:<\/em><\/strong> FPI\noffers investors an easy opportunity to vary their portfolio globally. An\ninvestor would diversify their portfolio to accomplish a higher risk-adjusted\nreturn.<\/li><li><strong><em>Global Credit:<\/em><\/strong>\nInvestors might able to access a better credit amount in foreign nations, permitting\nthe investor to utilize more leverage and make a better return on their equity\ninvestment.<\/li><li><strong><em>Increase the liquidity:<\/em><\/strong> As\nmarkets become more like liquid, they become wider and deeper, and a broader\nrange of investments can be financed. Investors can invest with the guarantee\nthat they will be capable of achieving their portfolio or selling their\nfinancial securities rapidly if they need access to their savings.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Limits_for_FPI_Investment_in_Corporate_bonds_for_FY_2021-22\"><\/span>What are the Limits for FPI Investment in Corporate bonds for F.Y. 2021-22?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>AD Category-I or Authorized Dealer Category-I banks is invited to Schedule 1 to the Foreign Exchange Management Regulations, 2019 (Debt Instruments) informed vide Notification No. FEMA.396\/2019-RB dated October 17, 2019, as modified regularly and the significant directions delivered thereunder. A reference is also summoned to A.P. (DIR Series) Circular No. 30 dated April 15, 2020, on the captioned matter.<\/li><li>For the Financial Year 2021-22, the Limits for FPI Investment in Corporate bonds will remain unchanged at 15 per cent of the outstanding stock of securities. Therefore, the reviewed limits for FPI investment in corporate bonds, after rounding off, will be as under the following table:<\/li><\/ul>\n\n\n\n<table class=\"wp-block-table\"><tbody><tr><td>\n  <strong><em>Limits for FPI Investment in Corporate\n  Bonds (Financial Year 2021-22)<\/em><\/strong>\n  <\/td><\/tr><tr><td>\n  Current Foreign Portfolio Investment\n  (FPI) Limit\n  <\/td><td>\n  Rs. 5,41,488 crores\n  <\/td><\/tr><tr><td>\n  Revised Limit for HY April -September\n  2021\n  <\/td><td>\n  Rs. 5,74,263 crores\n  <\/td><\/tr><tr><td>\n  Revised Limit for H.Y. October\n  2021-March 2022\n  <\/td><td>\n  Rs. 6,07,039 crores\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<ul><li>Authorized Dealer Category-I banks might bring the matters of this circular to the Notification of their constituents and customers concerned.<\/li><li>The modified limits for FPI investment in Central Government Securities and SDLs (State Development Loans for Financial Year 2021-22 will be advised individually. <\/li><\/ul>\n\n\n\n<table class=\"wp-block-table\"><tbody><tr><td>\n  <strong><em>Limits for FPI investment in G-Sec\n  (Central Government Securities) and SDLs<\/em><\/strong>\n  <\/td><\/tr><tr><td>\n  &nbsp;\n  <\/td><td>\n  General G-Sec\n  <\/td><td>\n  Long Term G-Sec\n  <\/td><td>\n  General SDL\n  <\/td><td>\n  Long Term SDL\n  <\/td><\/tr><tr><td>\n  Limits for FPI Investment\n  <\/td><td>\n  Rs. 2,34,531 Cr.\n  <\/td><td>\n  Rs.\n  1,03,531 Cr.\n  &nbsp;\n  <\/td><td>\n  Rs. 67,630 Cr.\n  <\/td><td>\n  Rs.7,100 Cr.\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<ul><li>In this circular, the directions have been\ndelivered under <strong><em>Sections 11 (1) and 10 (4) Exchange Management Act, 1999 (42 of 1999)<\/em><\/strong>and\nare without prejudgment to approval or consent, if any, needed under any other\nlaw.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In a\nnutshell, FPI is becoming progressively more common as a means of portfolio\ndiversification. FPI is famous among various types of investors.<\/p>\n\n\n\n<p>Moreover, the RBI, on March 31, 2021, has released an RBI\/2020-21\/116 A.P. (DIR Series) Circular No. 14 for the Limits for FPI Investment in Corporate bonds for F.Y. 2021-22. With this circular, the limits for Foreign Portfolio Investment will remain unchanged at 15 per cent of the outstanding stock of securities.<\/p>\n\n\n\n<p><strong>Also, Read:<\/strong> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/blog\/rbi-relaxes-norms-for-investment-by-fpi-in-defaulted-bonds\/\">RBI Relaxes Norms for Investment by FPI in Defaulted Bonds<\/a><\/mark><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Official_Circular_Copy_of_the_Limits_for_FPI_Investment_in_Corporate_bonds_for_FY_2021-22_by_RBI\"><\/span>Official Circular Copy of the Limits for FPI Investment in Corporate bonds for F.Y. 2021-22 by RBI<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n<a href=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/04\/Limits-for-FPI-Investment-in-Corporate-bonds-for-F.Y.-2021-22-by-RBI.pdf\" class=\"pdfemb-viewer\" style=\"\" data-width=\"max\" data-height=\"max\"  data-toolbar=\"bottom\" data-toolbar-fixed=\"off\">Limits-for-FPI-Investment-in-Corporate-bonds-for-F.Y.-2021-22-by-RBI<br\/><\/a>\n<p class=\"wp-block-pdfemb-pdf-embedder-viewer\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>On March 31, 2021, the Reserve Bank of India (RBI) has released an RBI\/2020-21\/116 A.P. (DIR Series) Circular No. 14 for the Limits for FPI Investment in Corporate bonds for F.Y. 2021-22. This circular states that the limits for Foreign Portfolio Investment in Corporate bonds will remain unchanged at 15% of the outstanding stock of [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":4222,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[56],"tags":[587],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/4221"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=4221"}],"version-history":[{"count":8,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/4221\/revisions"}],"predecessor-version":[{"id":4232,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/4221\/revisions\/4232"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/4222"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=4221"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=4221"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=4221"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}