Foreign Investment in Tier I and Tier II instruments issued by banks in India
With a view to permit banks in India to augment their capital through issue of Perpetual Debt instruments eligible for inclusion as Tier I capital and Debt capital instruments as upper Tier II capital, RBI has decided to permit Foreign Institutional Investors (FIIs) registered with SEBI, and Non-Resident Indians (NRIs) to subscribe to these instruments subject to the following conditions :-
a. The investment by all FIIs in Perpetual Debt instruments (Tier I) should not exceed an aggregate ceiling of 49 per cent of each issue, and investment by individual FII should not exceed the limit of 10 per cent of each issue.
b. The investments by all NRIs in Perpetual Debt instruments (Tier I) should not exceed an aggregate ceiling of 24 per cent of each issue and investments by a single NRI should not exceed 5 percent of the issue.
c. The investment by FIIs in Debt capital instruments (Tier II) shall be within the limits stipulated by SEBI for FII investment in corporate debt.
d. Investment by NRIs in Debt capital instruments (Tier II) shall be in accordance with the extant policy for investment by NRI s in other debt instruments.
RBI CIRCULAR NO. 24, Dated: January 25, 2006