RBI Update: Relaxation for investments made by Foreign Portfolio Investors in Corporate Debt Securities through general route
Recently, the Reserve Bank of India (‘RBI’) vide its circular dated 8 May 2025 has relaxed certain conditions for investments made by Foreign Portfolio Investors (‘FPIs’) in Corporate Debt Securities (‘Debt Securities’) through general route.
Existing conditions
Prior to the amendment, inter alia, the following conditions were applicable to FPIs for investment in Debt Securities under the general route:
Short-term investment (i.e. investments with residual maturity up to one year) cannot exceed 30% of the total investment made by FPI in Debt Securities (subject to certain exclusions).
The above condition shall be applied on investments on an end-of-day basis
- Investment in Debt Securities by FPI (including its related FPIs) cannot exceed 15% of the prevailing investment limit for such securities in case of long-term FPIs and 10% of the prevailing investment limit for other FPIs.
Relaxation
The RBI circular dated 8 May 2025 withdraws both the above conditions. This should provide greater ease and flexibility to FPIs investing in Debt Securities. Other conditions as applicable under the Master Direction - Reserve Bank of India (Non-resident Investment in Debt Instruments) Directions, 2025 continue to apply.
For more information on how these key updates affect your business, please reach out to the A&M Team for support.
