Norms relaxed for FIIs to buy G-secs from mkt

Sebi's move aimed at giving prop to rupee

Aimed at giving a much-needed prop to the rupee, market regulator, the Securities and Exchange Board of India (Sebi) has now relaxed norms for overseas investors in the debt categories of the market with immediate effect.

Accordingly, foreign institutional investors (FIIs) or qualified foreign investors (QFIs) will be allowed to buy government securities (G-secs) from the market directly, instead of going through the monthly auction conducted by the regulator to allocate these papers till the overall investment limit reaches 90 per cent, Sebi said in a notification here.

“Once this 90 per cent limit is reached, auction mechanism shall be initiated for allocation of the remaining limits, as currently in place for FII investments in Corporate Debt,” the notification added.

Simply put, under the new norms, all FIIs or sub-accounts may avail limits in the Corporate Debt -  Long-Term Infra category without obtaining Sebi approval till the overall FII investment reaches 90 per cent, after which the auction mechanism shall be initiated for allocation of remaining limits. Similarly, it has been decided to extend the allocation mechanism, as presently applicable for corporate debt securities, to FII/QFI investment in government debt securities also. It was further stated that consequent to the changes as above, the facility of reinvestment provided as well as the restrictions on reinvestment as given in the Sebi circulars shall no longer apply in respect of limits held/investments made by FIIs in the Government Debt category, till the limits are available on tap.

Meanwhile, those FIIs which had obtained Government Debt limits in the debt limit auctions held on August 20, 2013, the time period for utilisation of limits allocated through the bidding process shall be in terms of the Sebi circular dated July 31, 2013.

Also, Sebi on September 12, 2013 had done away with the requirements for obtaining photo identities, address proofs or any other documentary requirements of the beneficial owner, senior management personnel and authorised signatories for entities which are government-related or those regulated in other jurisdictions. It also highlighted in a separate press release that intermediaries can rely on third-party due-diligence in verifying the records of the identity of clients.