FPIs lap up govt bonds worth Rs 15,000 crore after new limits

New Delhi: Foreign Portfolio Investors have lapped up government debt securities, including state bonds, worth nearly Rs 15,000 crore within days of limits being hiked for these instruments.

With effect from October 12, an additional Rs 16,431 crore was available for investment in various government bonds following an increase in investment limits by RBI and Sebi.

Out of this, investment limits worth about Rs 5,600 crore were allotted through an e-auction, while the rest was available on tap.

As per the latest data available with NSDL (National Securities Depository Ltd), a total investment limit worth Rs 1,545 crore has been available for investing in government securities as on October 16, while those for state bonds has been at Rs (-)62 crore.

RBI and Sebi earlier this month allowed greater foreign fund flows into government securities, which are generally favoured by FPIs over the corporate bonds in India. Following this, additional limits have been available.

In further opening up, the limits would be enhanced by another Rs 16,600 crore from January 1 ownwards.
The cap has been now raised to Rs 1,70,000 crore from Rs 1,53,569 crore previously. As against the previous limit, the total investments by FPIs in government bonds stood at Rs 1,66,956 crore as on October 16.

In comparison, the total investments by FPIs in corporate bonds stood at Rs 3,54,505 crore as against a cap of Rs 4,14,323 crore.

The enhanced limits include a first-ever separate category for state development debt securities where FPIs can invest up to Rs 3,500 crore with effect from October 12. This would be doubled to Rs 7,000 crore from January 1.

The auction conducted by the BSE had attracted bids of staggering Rs 17,266 crore from FPIs, three times higher than securities put on offer valued Rs 5,600 crore.