Lock-in for FIIs in infra bonds may be cut to 1 year

“India is toying with the idea of reducing lock-in period of long-term infra bond for FIIs from three years to one year,” a senior Finance Ministry official said.

The Reserve Bank of India had recently liberalised the norms allowing foreign institutional investors (FIIs) to invest up to US$25 billion, up from the earlier limit of US$5 billion, in bonds and debentures of Indian infrastructure companies.

However, this is subject to residual maturity of five years or above and the investments would have a lock-in-period of three years. This lock-in-period is computed from the time of first purchase by FIIs.

The official said if the lock-in period is reduced, FIIs will find its more attractive to invest in such bonds.