Rationalisation of Debt Limits by SEBI

SEBI has eased the norms for debt limits of foreign institutional investors. This step has seen to be inline with the RBI policy to ratinalise the foreign investment in debt market.

The new circular issued by SEBI on 1st April 2013 states that the debt limits of FII will be classified into two categories -

Category	Amount in $ billion
Government Securities	25
Corporate Bonds	51

SEBI has clarified that eligible FII and QFI can invest in -

• Treasury Bills upto $5.5 billion within the limits of $25 billion and
• Commercial Papers upto $ 3.5 billion within the limit of $51 billion

Prior to this the debt limits were as under - 

Category	Sub-category	Amount
Government Securities	Government Debt - Old	$ 25 billion
	Government Debt - Long Term	$15 billion
Corporate Bonds	Corporate Debt Old FII	$20 billion
	Corporate Debt Old QFI	$1 billion
	Corporate Debt - Long Term	$5 billion
	Corporate Debt - Long Term Infra	$12 billion
	QFI Investment in Debt fund which invest in infra	$3 billion
	Investment in IDF	$10 billion

Other Modification made by this circular

1. Current SEBI auction mechanism of allocating debt limits for corporate bonds shall be replaced by the "on tap system" which is currently in force for infrastructure bonds
2. Current practice of Dissemination of fortnightly debt utilization status shall be discounted