Sebi allocates Rs 5K cr separate IRF investment window for FPIs

Currently, the foreign portfolio investor (FPI) limit for government securities is fungible between investments in securities and investment in bond futures. The decision comes after Reserve Bank in August had proposed to institute a separate limit of Rs 5,000 crore for investment by FPIs in IRF.

The move is aimed at facilitating further market development and ensuring that FPIs access to bond futures remains uninterrupted during the phase when FPI limits on government securities are under auction.

"Accordingly, it has been decided to allocate a separate limit of Rs 5,000 crore to FPIs for taking long position in IRFs," the Securities and Exchange Board of India (Sebi) said in a circular.

For each interest rate futures instrument, position of FPIs with a net long position will be aggregated. Besides, overseas investors with a net short position in the instrument will not be reckoned.

"No FPI can acquire net long position in excess of Rs 1,800 crore at any point of time," it added. An IRF is a contract between a buyer and a seller for future delivery of an interest-bearing security such as government bonds.