The Reserve Bank of India (RBI) through a circular dated 3 February has introduced conditions for foreign portfolio investors (FPIs) to make future investments in and redeem corporate bonds. The circular has introduced the following changes:
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FPIs will be allowed to invest only in corporate bonds which have a minimum residual maturity of three years.- FPIs will be prohibited from investing in corporate bonds with optionality clauses exercisable before three years have elapsed.
- FPIs will not be subject to a lock-in period and will be free to sell corporate bonds, including those with a maturity of less than three years, to domestic investors.
- FPIs will not be allowed to make any further investment in liquid and money market mutual fund schemes.
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