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Now Foreign Investors Can Invest in Unlisted Corporate Debt Securities

As announced in the Union Budget 2016-17, it has now been decided to expand the investment basket of eligible instruments for investment by FPIs under the corporate bond route to include the following:

(i) Unlisted corporate debt securities in the form of non-convertible debentures/bonds issued by public or private companies subject to minimum residual maturity of three years and end use-restriction on direct foreign investment in india 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, 2000 Notification No.FEMA.362/2016-RB dated February 15, 2016. The custodian banks of FPIs shall ensure compliance with this condition.
(ii) Securitised debt instruments as under:
(a) any certificate or instrument issued by a special purpose vehicle (SPV) set up for securitisation of asset/s where banks, FIs or NBFCs are originators; and/or
(b) any certificate or instrument issued and listed in terms of the SEBI Regulations on Public Offer and Listing of Securitised Debt Instruments, 2008.

(iii) Investment by FPIs in the unlisted corporate debt securities and securitised debt instruments shall not exceed Rs. 35,000 crore within the extant investment limits prescribed for corporate bond from time to time which currently is Rs. 2,44,323 crore. Further, investment by FPIs in securitised debt instruments shall not be subject to the minimum 3-year residual maturity requirement.
Original Source: http://bit.ly/2efTXm0