RBI Eases Foreign Investment Norms, Expands Access for NRIs, OCIs and Overseas Investors
The Reserve Bank of India (RBI) on Friday announced a series of measures aimed at attracting foreign capital, including higher investment limits for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) in listed Indian companies.
Speaking after the latest meeting of the RBI’s Monetary Policy Committee (MPC), RBI Governor Sanjay Malhotra said the limits for investment by NRIs and OCIs in equity instruments traded on stock exchanges without registration with the Securities and Exchange Board of India are being increased.
The central bank has also extended the same facility to all individual Persons Resident Outside India (PROIs), placing them on par with NRIs and OCIs for such investments.
As part of measures to encourage foreign currency inflows, the RBI announced 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.
The Governor further said authorised dealer (AD) banks will be allowed to avail a similar facility to bear the full hedging cost while raising fresh three-to-five-year Foreign Currency Non-Resident Bank [FCNR(B)] deposits until September 30, 2026.
To strengthen foreign participation in government securities, the RBI has expanded the universe of securities eligible under the Fully Accessible Route (FAR). All new issuances of 15-year, 30-year and 40-year government securities will now be included under the route.
In another move to attract overseas investors, the RBI has removed restrictions related to short-term investments, concentration limits and individual security limits applicable to foreign portfolio investors (FPIs) investing under the General Route.
Malhotra said these measures, along with tax-related announcements made by the government earlier in the day, are expected to support foreign capital inflows and facilitate government borrowing.
The RBI also proposed restoring the time limit for realisation of export proceeds to nine months, a move expected to support exporters and improve foreign exchange inflows.
“While these measures are expected to strengthen our balance of payments, we will continue to make the right policy adjustments to further promote exports and attract and incentivise capital inflows,” the Governor said.
On exchange rate management, Malhotra reiterated that India does not target any specific exchange rate level or band and allows the value of the rupee to be determined by market forces. However, he noted that the central bank would intervene when necessary to curb excessive volatility and prevent disorderly movements arising from speculative pressures or heightened uncertainty.
He stressed that while the RBI does not seek to resist market-driven adjustments, it remains committed to ensuring orderly functioning of the foreign exchange market.
