The Securities and Exchange Board of India on Thursday increased the investment limit by foreign institutional investors  or their sub-accounts in government securities to $3.2 billion from $2.6 billion.

The investment by FIIs in debt-oriented mutual funds (including the units of money market and liquid funds) will be hereafter considered as corporate debt investments and reckoned within the stipulated limit of $1.5 billion ,which is earmarked for FII investments in corporate debt.

The capital market regulator has cancelled the individual limits on investment in debt allocated to FIIs.

The allocation of unutilised limits for investments in the government securities will be on a first-come-first-serve basis.

"It is seen that the corporate debt investments exceed the permissible limit of $1.5 billion.

In order to conform to the stated limit, there shall be no further investment or rollover of the existing position in corporate debt till the holdings fall within the stipulated limit," the circular said.