The Mauritius-domiciled Fixed Maturity Plan is a closed-ended debt fund that aims to generate returns through investments in debt and money market instruments such as domestic bonds of Indian corporates with a tenure of about 12 months.
Paul Parambi, head of international business at Kotak Mahindra Bank, said: “From 1992 to 2009, cumulative investment by foreign institutional investors into Indian debt totalled $7.46bn, whereas, within just the first six months of 2010, net [foreign investment] in Indian debt touched $6.88bn.
“These strong inflows have been driven by the significant difference in the prevailing yields in the Indian markets compared with the western world.
The opportunity window for investment in Indian debt is limited because there are caps on the total amount of foreign money that can be invested in the Indian debt market.” Kotak Mahindra is a wholly-owned subsidiary of the Kotak Mahindra Bank of India.
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