Limit of Investment for outstanding corporate bond for Foreign Portfolio Investment in Union Budget 2020-21 has been extended upto :

The answer is D (15%). The ceiling for foreign portfolio investors in corporate bonds is expressed as a share of the outstanding stock of corporate bonds of a given issuer or in the market as a whole, and it was raised to 15% in the budget-linked liberalisation of the period. The figure is commonly tested as 15%, and the 9% and 10% options are the older or lower ceilings that aspirants often confuse with it.

Why the others are wrong:

• A) 9% was the earlier cap for FPI holdings in corporate bonds, which is why it appears as a distractor.
• B) 10% is not the limit announced for corporate bonds.
• C) 12% is not the relevant limit either.

The core concept is the sectoral and instrument-wise cap regime for FPIs under the FEMA and RBI/SEBI framework, where limits are fixed as a percentage of outstanding stock and periodically revised. Mains relevance lies in debt market deepening, the rationale for opening corporate bonds to foreign capital, and the trade-off with financial stability. Check the current limits and rules directly, since the framework for FPI debt investment has been revised since 2020.

Trap: Confusing the corporate bond FPI limit with the government securities limit, which was set separately and at a different level.