According to market regulator Securities and Exchange Board of India's regulations, FIIs are required to post collaterals for their transactions in the cash segment of the market.
So far, FIIs have been allowed to offer cash and AAA-rated foreign sovereign securities as collateral only for the derivatives segment.
"It has been decided to permit the FIIs to offer domestic Government Securities (the current limit being $5 billion), and foreign sovereign securities with AAA rating, as collateral to the recognised stock exchanges in India, in addition to cash, for their transactions in the cash segment of the market," RBI said.
The statement said the operational guidelines in this regard will be issued separately by the Sebi.
As per the RBI data, FII investments in government treasury bills and other instruments, have risen from Rs 1,732 crore (Rs 17.32 billion) in 2006-07 to Rs 10,522 crore (Rs 105.22 billion) in 2008-09.
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