The RBI in consultation with the centre has doubled the investment limit in debt by foreign portfolio investors. This is to gain more investment in corporate and government debt. Post the rejig, the revised investment limit under the 'voluntary retention route' (VRR) stands at Rs. 1.5 lakh crore. The limit will be allotted on first come first serve basis and will be provided "on tap".
Also, as per the revised norms, FPIs will be allowed to invest in ETFs that discretely invest in debt funds. The minimum retention is 3 years for such investments.
The new scheme shall be on offer from Friday with an investment limit of Rs. 90630 crore and will be allotted under the VRR category for both corporate and government debt. The 'tap' will be kept open till the limit is fully allotted.
The move has been taken at a time when the Indian economy has slowed to its lowest in 6 years, with the threat of furthermore ballooning of fiscal deficit.