|
In order to boost the current liquidity situation in the Country , RBI has vide A.P. (DIR Series) Circular No. 49 dated 22 November, 2011
has allowed Foreign Investment in the following by
Eligible non -resident Investors on repatriation basis on terms and conditions as described
hereinafter.
- Rupee and Foreign currency denominated bonds issued by the Infrastructure Debt Funds (IDFs) set up as an Indian company and registered as Non-Banking Financial Companies
(NBFCs) with the Reserve Bank of India.
-
Rupee denominated units issued by IDFs set up as SEBI registered domestic Mutual Funds (MFs), in accordance with the terms and conditions stipulated by the SEBI and the Reserve Bank of India from time to time.
Eligible non- resident investors
- Sovereign Wealth Funds, Multilateral Agencies, Pension Funds, Insurance Funds and Endowment Funds which are registered with SEBI as eligible non- resident investors in IDFs (hereinafter referred to as ‘SEBI registered eligible non- resident investors in IDFs’).
- SEBI registered Foreign Institutional Investors (FIIs).
- Non Resident Indians (NRIs) as defined in the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 (Notification No. FEMA 20/2000-RB dated May 3, 2000), as amended from time to time.
- High Networth Individuals (HNIs) registered with SEBI as sub accounts of SEBI registered FIIs or HNIs which are separately registered with SEBI as eligible non-resident investors in IDFs in India.
Terms & Conditions
Eligible Instruments / Securities for non-resident investment in IDFs
|
Eligible non-resident investor |
Eligible instruments
|
Original / Initial Maturity
|
Lock in period |
| i) |
SEBI registered
eligible non- resident investors in IDFs (as per 3 (a) above) |
Foreign Currency and
Rupee denominated bonds and rupee denominated units issued by IDFs |
The original /
initial maturity of all aforementioned securities at the time of first
investment by a non resident investor shall be 5 years |
3 years. However,
all non-resident investors can trade amongst themselves within this lock in
period of three years |
| ii) |
SEBI registered FIIs
who qualify as (i) above |
Foreign Currency and
Rupee denominated bonds and rupee denominated units issued by IDFs |
| iii) |
SEBI registered FIIs
who do not qualify as (i) above |
Rupee denominated
bonds and units issued by IDFs |
| iv) |
NRIs |
Rupee denominated
bonds and units issued by IDFs |
Foreign Currency Denominated bonds
Foreign currency denominated bonds issued by IDFs would have to comply with all the terms and conditions (including all in cost) under the extant FEMA guidelines / regulations for External Commercial Borrowing (ECB), other than reporting requirements.
Quantitative limits for non- resident investment in IDFs:
- All non-resident investment in IDFs (other than NRIs) (in both Rupee and Foreign Currency denominated securities) would be within an overall cap / limit of USD 10 billion only. This cap / limit of USD 10 billion would be within the overall cap of USD 25 billion for FII investment in bonds / non convertible debentures issued by Indian companies in the infrastructure sector (where infrastructure is as defined under the extant ECB guidelines) or by Infrastructure Finance Companies (IFCs registered as NBFCs with the Reserve Bank).
- There would be no cap / limit for NRI investment in IDFs by way of Rupee denominated bonds / units.
End use of funds
-
IDFs set up as NBFCs may invest in debt securities of only Public Private Partnership (PPP) infrastructure projects which have a buyout guarantee and have completed at least one year of commercial operations. Refinance by IDF would be up to 85% of the total debt covered by the concession agreement.
-
IDFs set up as MFs would invest minimum of 90% of its funds in debt securities of infrastructure companies or SPVs across all infrastructure sectors, project stages and project types.
(where ‘infrastructure’ is defined in terms of the extant ECB guidelines)
Foreign exchange hedging
The facility of foreign exchange hedging would be available to the eligible non-resident IDF investors, IDFs as well as the infrastructure project companies exposed to the foreign exchange/ currency risk as per the extant provisions under Notification No. FEMA.25/2000-RB dated May 3, 2000, as amended from time to time.
Limits of Investment
-
Investment in listed non-convertible debentures/unlisted non-convertible debentures / bonds, with a residual maturity of five years and above, and issued by Indian companies in the infrastructure sector, where ‘infrastructure’ is defined in terms of the extant ECB guidelines, upto USD 25 billion (with this the total limit available to FIIs for investment in listed non convertible debentures / bonds would be USD 40 billion with a sub limit of USD 25 billion for investment in listed non-convertible debentures / bonds issued by corporates in the infrastructure sector).
-
Within overall limit of USD 25 billion, investment in non-convertible debentures/bonds issued by NBFC categorized as ‘Infrastructure Finance Companies†(IFCs) by Reserve Bank of India.
-
Such investment by FIIs in listed non-convertible debentures / bonds would have a minimum lock-in period of three years provided for lock-in period for investment upto USD 5 billion shall 1 year. The lock-in period shall be computed from the date of first purchase by FII. However, FIIs are allowed to trade amongst themselves during the lock-in period.
|
