INSUBCONTINENT EXCLUSIVE:
Mumbai: India is bracing for a bout of overseas inflow into debt securities with long-term foreign portfolio investors likely to pump in at
least $5 billion this calendar year through the new Voluntary Retention Route (VRR), which comes into effect on Monday.
The offshore money
expected through VRR, which offers higher operational flexibility against the commitment of a minimum holding period, will mitigate the risk
including Norges Bank (Norway), GIC Singapore and Abu Dhabi Investment Authority are expected to bet on local federal and corporate debt
papers, market executives said
Besides global pension funds and insurers, MNCs from the US, EU and Southeast Asia are in talks with local custodian banks to chalk out
investment plans under VRR.
Many large international pension funds from Canada and Australia are said to have evinced interest
Some FPIs have sought a clarification on whether they could bring 25 per cent in the first month and stagger the remaining amount over a
longer period.
Moreover, an FPI has to find another FPI while exiting the investment and booking a profit
International investors want to know if they can transfer their limit rights to a group of FPIs instead of a single entity at the time of
The RBI decided to open the new window for foreign investors in government and corporate debt to woo longer-term funds.
Investments through
the VRR route will be capped at Rs 40,000 for government securities and Rs 35,000 crore for corporate securities per annum
The investment limit shall be released in one or more tranches.
