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ARTICLE · 16 MAY 2018

Foreign Portfolio Investment In Debt Securities: Sweeping Changes In Legal Framework

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Amidst growing investor appetite for Indian debt securities and increased government and corporate debt needs, the Foreign Portfolio Investment (FPI) route has been a dominant source of foreign funding.

IndiaCorporate/Commercial Law
Manisha Shroff
Manisha Shroff
Madhuparna Dasgupta
Madhuparna Dasgupta
Meenakshi Kurpad
Meenakshi Kurpad
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Amidst growing investor appetite for Indian debt securities and increased government and corporate debt needs, the Foreign Portfolio Investment (FPI) route has been a dominant source of foreign funding. Liberalisation of the FPI route to allow investment in unlisted debt securities had further bolstered investments through this route. However, the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) have issued various circulars over the last couple of weeks, which have introduced extensive changes in the legal framework governing FPIs which will impact investment through this route, being:

  1. A.P. (DIR Series) Circular No. 22 dated 6 April 2018 (6 April Circular) – revises the debt limits applicable to FPIs in various debt securities and eased the requirement of purchasing the limits through the auction process.

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