The Centre has capped the cumulative external commercial borrowing (ECB) by Indian corporates from foreign institutional investors (FIIs) at $500 million. This ceiling will be over and above the sub-ceiling of $1.75 billion fixed by the Ministry of Finance (MoF) for FIIs.The MoF had earlier enhanced this limit from $1 billion with respect to FIIs’ investment in government debt under the overall ECB ceiling.A Sebi circular in this regard on Thursday said the new limit of $500 million is strictly for corporate debt. To this level, FIIs can invest in ECB to be raised by Indian corporates and it will not form the part of overall limit of $1.75 billion set by the Centre earlier for FIIs to invest in debt papers.FIIs in Indian capital market are allowed to invest in the domestic debt market in a limited way. Before the ceiling for these investors was enhanced to $1.75 billion, it was kept at $1 billion. Under this investment limit FIIs can invest in the government debt only up to the prescribed limit and corporate debt was excluded from this enhanced limit.
