Market regulator SEBI on Friday relaxed the norms for foreign investments in Indian infrastructure sector by including non-banking financial companies (NBFCs), categorised as ‘Infrastructure Finance Companies’ by the Indian central bank, as eligible issuers for the purpose of FII investment under the corporate debt long-term infra category.
Earlier, in circulars dated November, 2010. and March, 2011, SEBI had allowed FIIs to invest in unlisted bonds issued by companies in the infrastructure sector that are generally organised in the form of special purpose vehicles.
Top authorities, including the RBI, had been looking to boost investments in the infrastructure sector. Infrastructure has the most voracious appetite for fresh funds and comes out as a big opportunity for long term investors as it is a key enabler for India’s growth story.
Earlier this year, the Indian central bank had allowed FIIs to invest upto $25 billion in infrastructure bonds, including those issued by private companies.
SEBI had also decided to do away with the allocation methodology for investment in Corporate Debt – Long term Infra category with FII/sub-accounts being allowed can now avail of the enhanced ($25 billion) limits without obtaining Sebi approval till the overall FII investments reaches 90 per cent or $ 22.5 billion.
Moreover, to facilitate the FIIs during the lock-in period, the market regulator had said a special trading window for FIIs shall be provided by the exchanges on the same lines as is available for equities in companies where the overall FII investment has touched the maximum limit.