India sets up special window for SWFs

India is creating a special window in the government securities (G-Secs) segment for sovereign wealth funds (SWFs) and other long-term funds, with ease of entry and exit, Indian Embassy said last night.

During the recent visit to Doha of Indian Finance Minister P Chidambaram, India and Qatar had discussed investments by Qatar’s sovereign wealth fund, and other long-term investors in Asia’s third largest economy.

The Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi) have issued notifications enabling such investments.

Under this, India enhanced the limit for foreign investment in government securities from $25bn to $30bn with immediate effect.

The $5bn increase shall be available for investments only to foreign institutional investors (FIIs) registered with Sebi under the categories of SWFs, multilateral agencies, endowment funds, insurance funds, pension funds and foreign central banks.

To begin with, the amount of $5bn, together with the unutilised limit of approximately $6.2bn due for auction on June 20, will be made immediately available for investment on tap by the investors mentioned above.

The amount not utilised as on June 18 (out of the presently unutilised limit of approximately $6.2bn) will be put on auction on June 20. Similar exercise shall continue every month, the statement said.

With regard to the FIIs which have exhausted their reinvestment limits, as a one-time measure, a special window of up to $250mn per FII shall be available until the date of the next auction, which is June 20.

But this, the embassy said, is subject to the aggregate investments in government debt by all FIIs/qualified foreign investors being limited to $25bn.

Such investments made by FIIs using the special window shall be subject to a lock-in of 90 days. Moreover, these investments will not be eligible for re-investment facility, the embassy said.