FPIs can invest in unlisted corp bonds, securitised debt: Sebi

Regulator Sebi on Tuesday permitted FPIs to invest in unlisted corporate debt securities and securitised debt instruments with a ceiling of Rs 35,000 crore in a bid to deepen capital markets. The decision has been taken in order to enhance the investor base in unlisted debt securities and securitised debt instruments. "Investment by FPIs in the unlisted corporate debt securities and securitised debt instruments shall not exceed Rs 35,000 crore within the extant corporate debt limit which currently is Rs 2,44,323 crore," Securities and Exchange Board of India (Sebi) said in a circular.

The circular would come into force with immediate effect. Sebi said investments in the unlisted corporate debt securities "shall be subject to minimum residual maturity of three years and end use-restriction on investment in real estate business, capital market and purchase of land".

"The expression 'Real Estate Business' shall have the same meaning as assigned to it in Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations," Sebi said. FPIs have been permitted to invest in the unlisted corporate debt securities in the form of non-convertible debentures (NCDs) or bonds issued by an Indian public or private company.

Securitised debt instruments include certificate or instrument issued by a special purpose vehicle (SPV) set up for securitisation of asset with banks and other financial institutions. The permitted avenues also include certificate or instrument issued and listed in compliance of Sebi norms.