The Reserve Bank of India (RBI) has eased restrictions on investments in debt securities to allow foreign institutional investors (FIIs) to invest in non-convertible debentures (NCDs) and bonds issued by non-banking financial companies (NBFCs).
This applies to FIIs registered with the Securities and Exchange Board of India (SEBI) that invest in NCDs and bonds issued by NBFCs which are categorized as infrastructure finance companies. The relaxation was announced through circular 42, issued on 3 November.
In April, the RBI raised the limit for FII investment in NCDs and bonds issued by Indian companies in the infrastructure sector from US$5 billion to US$25 billion.
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The legislative and regulatory update is compiled by Nishith Desai Associates, a Mumbai-based law firm. The authors can be contacted at nishith@nishithdesai.com. Readers should not act on the basis of this information without seeking professional legal advice.
