However, there would be no lock-in period and FPIs would be able to sell the securities to domestic investors. Furthermore, FPI would not be allowed in liquid and money market mutual fund schemes, Sebi said in a circular effective immediately.

Sebi has amended the rules following announcements made by RBI in its bi-monthly monetary policy statement earlier in the day.

FPIs are allowed to invest up to USD 51 billion in corporate debt market.

"All future investments against the limits vacated whenthe current investment runs off either through sale or redemption, shall be required to be made in corporate bonds with a minimum residual maturity of three years," RBI said in a separate circular.

"There will, however, be no lock-in period and FPIs shall be free to sell the securities (including those that are presently held with less than three years residual maturity) to domestic investors," it added.

RBI Governor Raghuram Rajan in the monetary policy statement today said that FPIs are currently permitted to invest in government securities with a minimum residual maturity of three years.

"No such condition has been stipulated for their investments in corporate bonds. To harmonise requirements, it is decided in consultation with Government that all future investment by FPIs in the debt market in India will be required to be made with a minimum residual maturity of three
years," he said.

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