The Reserve Bank of India on Thursday allowed Foreign Portfolio Investors to invest in corporate bonds with a minimum residual maturity of three years.
Corporate Bonds are debt instruments that are issued by various corporates across the globe. They are relatively more secure than equity instruments.
The RBI said that it has been decided to permit FPI to acquire NCDs/bonds, which are under default, either fully or partly, in the repayment of principal on maturity or principal installment in the case of amortising bond.
The revised maturity period of such NCDs/bonds, restructured based on negotiations with the issuing Indian company, should be three years or more, added further.
The investors planning to acquire such bonds under default should disclose to the Debenture Trustees the terms of their offer to the existing debenture holders / beneficial owners from whom they are acquiring.
Such investment should be within the overall limit prescribed for corporate debt from time to time (currently Rs 2443.23 billion). All other existing conditions for investment by FPIs in the debt market remain unchanged.