Government securities or G-secs comprise treasury bills and dated securities issued by the Centre and state governments. At present, the FIIs can invest upto $10 billion or Rs 43,650 crore in G-secs.

As per the latest data, the FIIs have already exhausted their $10 billion investment limit for purchase of G-secs and it would have become difficult for them to buy more securities if the ceiling was not enhanced, a finance ministry official said. Similarly, the FII investment cap in corporate bonds will be raised from $15 billion to $20 billion.

Sebi is expected to notify the decisions in the next few days, the official said. The government in September revised its market borrowing programme for the current fiscal (2011-12) and decided to raise an additional Rs 52,800 crore from the market in the second half of the fiscal.

The government will now raise Rs 4.7 lakh crore from the market, as against Rs 4.37 lakh crore in the previous fiscal. This raised apprehensions that increased government borrowing in the second half will reduce credit availability for the private sector and crowd them out from the market.