The Government of India on 12th June, 2013 enhanced the limit of foreign investments in government securities by 5 billion US dollar. In this regard, which of the following statements is not correct?
It was done in order to increase inflow of overseas capital
It will strengthen the value of rupee
The foreign institutional investors registered to SEBI are only eligible for investment in the enhanced limit of 5 billion US dollar
The investment can be made in all categories of investments across the board
Answer is Right!
Answer is Wrong!
This question was previously asked in
UPSC CAPF – 2013
– Increasing foreign investment limits in debt markets (like G-secs) helps increase the supply of foreign currency (US Dollars) in the Indian market, which can strengthen the demand for the Indian Rupee, potentially supporting its value.
– Foreign Institutional Investors (FIIs, now largely replaced by Foreign Portfolio Investors – FPIs) registered with SEBI are the primary channels through which foreign investments are made in the Indian securities market under specified limits and regulations. Therefore, eligibility was indeed restricted to such registered entities.
– The enhancement was specifically for investments in government securities and corporate bonds, not “all categories of investments across the board”, which would include equities, alternative investment funds, etc.
– The total FII limit for investment in government securities was raised to $25 billion after this announcement.