New Delhi: The Reserve Bank of India has suggested the Finance Ministry to set limits for investment in government securities in the domestic currency instead of dollar as it would provide more headroom for investment by foreign institutional investors (FIIs).
The RBI, according to sources, has written to the ministry to consider setting up foreign institutional investment limit in rupee terms.
The calculation in rupee term would provide higher headroom for investment and result in greater inflow of foreign currency.
Currently, the investment limit for G-Sec by FIIs is pegged at $30 billion annually.
Out of the $30 billion, FIIs are allowed to invest $25 billion, whereas $5 billion is for long-term investors.
In rupee terms, the FII limit in the government securities is Rs 1.92 lakh crore.
The RBI and the government has been trying to attract foreign direct investment (FDI) as well as foreign portfolio investment.
This is also necessary to keep the rupee stable against dollar.
The Indian currency has been depreciating against dollar for past few weeks but on Friday it gained 18 paise to close at a one-month high of 63.55 against the US currency on sustained selling of the greenback by banks and exporters amid firm stock markets.
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