RBI Eases FPI Investment Norms in Government Securities – Key Amendments to Regulatory Framework
RBI A.P. (DIR Series) Circular No. 11 | RBI/2026-27/97 | Dated: June 05, 2026
Background
The Reserve Bank of India, vide A.P. (DIR Series) Circular No. 11 dated June 05, 2026, has introduced significant amendments to the regulatory framework governing investments by Foreign Portfolio Investors (FPIs) in Government Securities. These changes are made under the Foreign Exchange Management (Debt Instruments) Regulations, 2019 and the Master Direction on Non-resident Investment in Debt Instruments, 2025.
1. Withdrawal of Three Investment Limits under General Route
Until now, FPI investments in Government Securities through the General Route were subject to three restrictions — the short-term investment limit, the security-wise limit, and the concentration limit. On a review, RBI has decided to withdraw all three limits with immediate effect, providing greater ease of investment for FPIs in Indian Government Securities.
2. Merger of Sub-Categories of Investment Limits
RBI has decided to merge the existing sub-categories of 'general' and 'long-term' investment limits into a single unified limit for investment in Central Government Securities and State Government Securities (SGSs) respectively.
The revised investment limits for FY 2026-27 are as follows:
| Half Year | Central Govt Securities (₹ Crore) | State Govt Securities (₹ Crore) |
|---|---|---|
| Apr 2026 – Sep 2026 | 4,62,490 | 1,53,043 |
| Oct 2026 – Mar 2027 | 4,77,006 | 1,64,242 |
3. Expansion of the Fully Accessible Route (FAR) Basket
RBI has additionally designated the following instruments as 'specified securities' under the Fully Accessible Route (FAR):
Government Securities: All new issuances in 15-year, 30-year, and 40-year tenors.
Sovereign Green Bonds: All new issuances in 5-year, 7-year, 10-year, 15-year, 30-year, and 40-year tenors.
Existing Securities added to FAR:
| Sr. No. | ISIN | Security |
|---|---|---|
| 1 | IN0020250042 | 6.68% GS 2040 |
| 2 | IN0020250075 | 7.24% GS 2055 |
| 3 | IN0020260033 | 7.71% GS 2066 |
4. Effective Date
All directions contained in this circular have come into effect immediately. The updated Master Direction has also been issued alongside this circular.
PMK Perspective
These amendments reflect RBI's continued effort to deepen India's Government Securities market and attract long-term foreign capital. The removal of the three-pronged restriction under the General Route, combined with the expansion of the FAR basket to include longer-tenor securities and Sovereign Green Bonds, signals a more open and investor-friendly debt market framework. FPIs and their custodians should take note of the revised limits and updated Master Direction accordingly.
Source: RBI A.P. (DIR Series) Circular No. 11 dated June 05, 2026
Prepared by: PMK Advisors | PMK Bulletin
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