RBI lifts cap on FPI investments in bonds

The Reserve Bank of India (RBI) Friday withdrew the 20% limit on investments by FPIs in corporate bonds of an entity with a view to encourage more foreign investments. As part of the review of the FPI investment in corporate debt undertaken in April 2018, it was stipulated that no FPI should have an exposure of more than 20% of its corporate bond portfolio to a single corporate (including exposure to entities related to the corporate). While the provision was aimed at incentivizing FPIs to maintain a portfolio of assets, market feedback indicates that foreign portfolio investors (FPIs) have been constrained by this stipulation, the RBI said.