The Reserve Bank of India (RBI) has raised the overall limit for overseas investment by domestic mutual funds from $5 billion to $7 billion.
While the central bank said in a late evening statement that the decision was taken “with a view to providing greater opportunity for investment overseas”, the move is also being viewed as an effort to enhance outflows at a time when foreign capital flows could rise in the coming weeks.
The mutual fund industry appeared a little surprised by the sudden move since even the existing limit was not being utilised. Industry estimates peg the amount invested overseas at $1 billion to $2 billion. Only last September, RBI had raised the overseas investment limit for mutual funds from $4 billion to $5 billion.
In its statement on Thursday, RBI said the overall ceiling for investment in overseas exchange-traded funds will continue to be at $1 billion.
At present, there are about 17 schemes that invest overseas, which include equity and debt. At present, the individual investment limit per fund house is $300 million.
“The appetite for global investment from Indian investors is slowly increasing, but coming days may see more steps to allow domestic investors to have greater asset allocation overseas.
While the central bank said in a late evening statement that the decision was taken “with a view to providing greater opportunity for investment overseas”, the move is also being viewed as an effort to enhance outflows at a time when foreign capital flows could rise in the coming weeks.
The mutual fund industry appeared a little surprised by the sudden move since even the existing limit was not being utilised. Industry estimates peg the amount invested overseas at $1 billion to $2 billion. Only last September, RBI had raised the overseas investment limit for mutual funds from $4 billion to $5 billion.
In its statement on Thursday, RBI said the overall ceiling for investment in overseas exchange-traded funds will continue to be at $1 billion.
At present, there are about 17 schemes that invest overseas, which include equity and debt. At present, the individual investment limit per fund house is $300 million.
“The appetite for global investment from Indian investors is slowly increasing, but coming days may see more steps to allow domestic investors to have greater asset allocation overseas.
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