New Delhi: Seeking to narrow the current account deficit (CAD), the Finance Ministry today increased FII limits in government securities and corporate bonds by USD 5 billion each, taking the total investment limit in domestic debt to USD 75 billion.
"As far as FII (foreign institutional investors) debt limit is concerned, two new categories have been created. One USD 5 billion in government securities without any stipulated residual which will be open to pension fund, central banks, sovereign wealth funds.
"Other USD 5 billion will be open for corporate bond and Gilt. So the overall limit goes up from USD 65 billion to USD 75 billion," Finance Ministry sources said.
The overall limit of domestic debt is distributed through a host of categories across government, corporate and infrastructure debt.
This would bring in additional long term funds into India, he said adding that the guidelines would be notified in 7-10 days by Reserve Bank.
Government, which is battling a high current account deficit (CAD), is trying to attract more foreign funds into the country. The CAD, which is the gap between inflows and outflows of foreign funds, was a high of 4.5 percent in the previous (2011-12) fiscal.
In the current fiscal the CAD is expected to ease to 3.5 percent.
In order to contain CAD, the RBI has already imposed restrictions on financing of gold purchases to curb speculations of the yellow metal.
Gold import during the first half of the fiscal amounted to USD 20 billion out of the total import of USD 233 billion.
First Published: Friday, November 30, 2012, 22:15