Foreign banks seek easier norms for FPIs in corp debt
Reserve Bank of India to relax some norms for foreign investment in corporate debt to capitalise on surging global interest in local fixed-income instruments following the country's inclusion in a JP Morgan bond index, multiple sources told ET.
«Banks, mostly foreign banks, have requested the RBI for some relaxations in norms for foreign portfolio investment (FPI) in corporate bonds such as the rule that allows FPI investment only in corporate bonds with a minimum residual maturity of above one year subject to a 30% cap,» a source aware of the developments said.
«Banks have expressed that this is an opportune time to ease some rules while adhering to prudential safeguards, as FPI interest in sovereign bonds has skyrocketed after the JP Morgan index inclusion, although in comparison, the interest in corporate debt is muted,» the source said.
Other matters brought up by banks include the limit of 50% investment by FPIs in any issuance of a corporate bond as well as a request to reduce the existing three-year lock-in period for FPI debt investments under the voluntary retention route (VRR), sources said.
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