- In a move aimed at strengthening foreign exchange inflows and supporting the Indian rupee, the Reserve Bank of India (RBI) has announced five major measures to attract foreign capital into the country.
- The measures come at a time when the rupee is facing pressure due to the ongoing conflict in West Asia, rising crude oil prices, and sustained foreign portfolio investor (FPI) outflows from Indian equity markets.
- The initiatives are designed to improve capital inflows, enhance investor participation, and strengthen India’s external sector resilience.
Expansion of Investment Opportunities in Government Securities
As the first measure, the RBI has expanded the investment universe for foreign investors under the Fully Accessible Route (FAR).
The central bank announced that all newly issued 15-year, 30-year, and 40-year Government Securities (G-Secs) will now be included in the list of specified securities available under FAR.
Additionally, restrictions related to:
- Short-term investments,
- Concentration limits, and
- Individual security limits
for Foreign Portfolio Investors (FPIs) investing through the General Route will be removed.
These changes are expected to make Indian government bonds more attractive to overseas investors and facilitate government borrowing.
Higher Investment Limits for NRIs, OCIs and Other Overseas Individuals
The second measure focuses on expanding investment opportunities for overseas Indians and foreign residents.
The RBI has increased the limits for investment by:
- Non-Resident Indians (NRIs)
- Overseas Citizens of India (OCIs)
in equity instruments traded on Indian stock exchanges without requiring registration with the Securities and Exchange Board of India (SEBI).
Further, the same facility will now be extended to all individual Persons Resident Outside India (PROIs), placing them on par with NRIs and OCIs.
This move is expected to encourage greater participation from individual foreign investors in Indian capital markets.
Concessional Forex Swap Facility for Public Sector Borrowings
As the third measure, the RBI has introduced a concessional foreign exchange swap facility for External Commercial Borrowings (ECBs) raised by Public Sector Undertakings (PSUs).
The facility will remain available until September 30, 2026, and is intended to reduce the cost of raising overseas funds while encouraging foreign currency borrowings.
Incentives for FCNR(B) Deposits
The fourth measure aims to boost foreign currency deposits in the banking system.
The RBI has announced a special facility that will allow Authorized Dealer (AD) banks to raise fresh Foreign Currency Non-Resident [FCNR(B)] deposits with maturities of three to five years.
Under the scheme, banks will be provided support for bearing the full hedging cost associated with these deposits. The facility will remain available until September 30, 2026.
The initiative is expected to attract more foreign currency deposits from non-resident Indians and strengthen India’s foreign exchange reserves.
Restoration of Export Proceeds Realisation Period
As the fifth measure, the RBI has proposed restoring the timeline for realization and repatriation of export proceeds to nine months.
The move is expected to improve export-related foreign exchange inflows and support the country’s external account position.
Why These Measures Matter
The RBI’s latest initiatives come against the backdrop of heightened global uncertainty, rising energy prices, and volatility in international financial markets.
The measures are aimed at:
- Strengthening foreign exchange inflows.
- Supporting the stability of the Indian rupee.
- Enhancing foreign investor participation in Indian markets.
- Boosting foreign currency deposits.
- Facilitating government borrowing.
- Improving liquidity in the foreign exchange market.
Together, these steps are expected to provide additional support to India’s external sector and reinforce investor confidence amid challenging global conditions.
Key Highlights
- RBI announced five measures to attract foreign capital and support the rupee.
- New 15-year, 30-year, and 40-year government securities included under the Fully Accessible Route (FAR).
- FPI investment restrictions under the General Route to be removed.
- Investment limits for NRIs, OCIs, and other Persons Resident Outside India enhanced.
- Concessional forex swap facility introduced for PSU external commercial borrowings.
- Special support announced for fresh FCNR(B) deposits.
- Export proceeds realization period restored to nine months.