RBI lifts FPI limits and expands bond access to draw foreign capital

The Reserve Bank of India announced a series of regulatory changes aimed at attracting foreign capital. It removed short‑term, security‑wise and concentration limits for Foreign Portfolio Investors (FPIs) investing in government securities under the General Route and merged the previous general and long‑term limits into a single ceiling for Central and State Government securities for FY 2026‑27. The RBI also expanded the Fully Accessible Route (FAR) to include all new issuances of 15‑, 30‑ and 40‑year bonds and designated additional government securities and sovereign green bonds as “specified securities”.

In parallel, investment limits for NRIs, OCIs and other Persons Resident Outside India were increased for listed equity instruments without requiring SEBI registration. New facilities were introduced to lower borrowing costs: a concessional foreign‑exchange swap for public‑sector undertakings and a scheme under which the RBI will bear hedging costs for fresh FCNR(B) deposits of three to five years. Export‑proceeds realisation time was restored to nine months. RBI Governor Sanjay Malhotra said, “These measures along with the tax benefits provided by the government this morning should help attract foreign capital for government borrowing.”