On July 7, 2022, the RBI widened the scope of the ‘Fully Accessible Route’ (FAR) for non-resident investment in government bonds to include 7-year and 14-year securities. Foreign portfolio investors’ holdings of the 7-year government bond have since increased multi-fold to ₹7,084 crore as on March 31, 2023, compared with ₹118 crore before the inclusion of the bond in the FAR category, the RBI said in its annual report for 2022-23.
Over the same period, FPI holdings of the 14-year security went up to ₹1,313 crore from ₹36 crore.
“This augmentation of the FAR with the 7- and 14-year securities has been well received by the FPIs, as indicated by the build-up of the FPI holdings since July 8, 2022,” the RBI said in the report.
In the previous financial year, FPI investment in the general category had reduced by ₹13,331 crore to ₹66,869.49 crore, Clearing Corporation of India data showed.
Overseas investors pared exposure to Indian debt as a stronger US dollar and sharp rate hikes by the US Fed ate into the returns from domestic bonds.
CORPORATE DEBTThe measures announced by the RBI on July 7 to augment capital flows included a relaxation in the requirements for FPI investment in corporate debt.
The exemptions were applicable till October 31 last year. During the period, FPIs invested ₹3,955 crore in commercial papers, the RBI said. Commercial papers are short-term debt instruments issued by companies for working capital requirements.
The central bank had exempted FPIs from short-term limit requirements, which placed a limit of 30% on investment in government and corporate bonds having a residual maturity of less than a year.
In the previous financial year, FPI investment in corporate debt had dropped by ₹17,352 crore to ₹103,666 crore, NSDL data showed.
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.
