Securities and Exchange Board of India
CIRCULAR No. IMD/FPIC/CIR/P/2017/81
Dated: July 20, 2017
1. All Foreign Portfolio Investors (through their designated Custodians of Securities)
2. The Depositories (NSDL and CDSL)
3. The Exchanges (BSE and NSE)
Dear Sir / Madam,
Sub: Investments by FPIs in Corporate Debt
1. This has reference to the SEBI circular SEBI/HO/IMD/FPIC/CIR/P/2016/67 dated August 04, 2016 whereby the Corporate debt limit of INR 244,323 cr for FPIs was redefined as the Combined Corporate Debt Limit (CCDL) for all foreign investments in Rupee denominated bonds issued both onshore and overseas by Indian corporates.
2. In partial modification to Para 4 of the said circular, the CCDL shall be available on tap for investment by foreign investors till the overall investment reaches 95%, after which, the auction mechanism shall be initiated for allocation of the remaining limits.
3. In the event the overall FPI investment in CCDL exceeds 95% (as indicated by the debt utilisation status updated daily on the websites of NSDL and CDSL), the following procedure shall be followed:
a. The depositories (NSDL and CDSL) shall direct the custodians to halt all FPI purchases in corporate debt securities.
b. The depositories shall then inform the exchanges (NSE and BSE) regarding the unutilised debt limits for conduct of auction. Upon receipt of information from the depositories, the exchange (starting with BSE) shall conduct an auction for the allocation of unutilised debt limits on the second trading day from the date of receipt of intimation from the depositories. Thereafter, the auction shall be conducted alternately on NSE and BSE.
c. The auction shall be held only if the free limit is greater than or equal to INR 100 cr. However, if the free limit remains less than 100 cr for 15 consecutive trading days, then an auction shall be conducted on the sixteenth trading day to allocate the free limits.
d. The auction shall be conducted in the following manner :
e. Once the limits have been auctioned, the FPIs will have a utilisation period of 10tradingdays within which they have to make the investments. The limits not utilised within this period shall come back to the pool of free limits.
f. Upon sale/redemption of debt securities, the FPI will have a re-investment period of 2 trading days. If the reinvestment is not made within 2 trading days, then the limits shall come back to the pool of free limits.
g. A single FPI/ FPI Group cannot bid for more than 10% of the limits being auctioned.