RBI Liberalises FPI Investment Framework for Government Securities

The RBI has undertaken a comprehensive review of the regulatory framework governing FPI investments in Government Securities and introduced several investor-friendly measures. 

Most notably, the RBI has withdrawn the requirement for FPIs investing through the General Route to comply with the short-term investment limit, security-wise limit, and concentration limit. These restrictions had historically constrained investment flexibility and portfolio management by foreign investors. 

In addition, the RBI has merged the existing “general” and “long-term” sub-categories of investment limits into a single consolidated investment limit for Central Government Securities and State Government Securities respectively. 

The circular also expands the Fully Accessible Route by designating additional Government Securities and Sovereign Green Bonds as “specified securities” eligible for unrestricted FPI investment. The revised framework takes immediate effect.