The Reserve Bank of India (RBI) announced on April 26 that it will keep the investment limits for Foreign Portfolio Investors (FPIs) in government securities unchanged for the fiscal year 2024-25. This decision maintains the cap at 6 percent of the outstanding stocks of government securities.
Additionally, the central bank confirmed that the FPI limits for investment in state government securities and corporate bonds will remain unchanged at 2 percent and 15 percent, respectively, of the outstanding securities stocks for the fiscal year 2024-25.
In a statement, the RBI outlined that the allocation of incremental changes in the g-sec limit, in absolute terms, will continue to be split evenly between the two sub-categories, namely ‘General’ and ‘Long-term’, maintaining the 50:50 ratio for the fiscal year 2024-25.
Furthermore, the RBI specified that the aggregate limit of the notional amount of Credit Default Swaps (CDS) sold by FPIs will be set at 5 percent of the outstanding stock of corporate bonds.
As a result of these decisions, the RBI has established an additional limit of Rs 2,54,500 crore for the fiscal year 2024-25, providing clarity and direction for foreign investment in Indian securities.
The maintenance of these investment limits underscores the RBI’s commitment to fostering a stable and transparent investment environment while balancing the needs of domestic and foreign investors. These measures are crucial for sustaining investor confidence and promoting the growth and stability of India’s financial markets.