RBI Notifies FPI Investment Limits
for FY 2026-27; VRR Merged with General Route
·
Regulatory Reference
o
Based on provisions under FEMA Debt Instruments Regulations, 2019 and updated Master
Direction (2025).
o
Supersedes earlier circular dated April 03, 2025.
·
Investment Limits Retained (Percentage of
Outstanding Stock)
o
Government Securities (G-Secs): 6%
o
State Government Securities (SGSs): 2%
o
Corporate Bonds: 15%
·
Category-wise Allocation
o
Incremental G-Sec limits split 50:50
between:
§ General
Route
§ Long-Term
Route
o
Entire increase in SGS limits allocated to General
category.
·
Fully Accessible Route (FAR)
o
Investments in specified securities continue under FAR
without restrictions.
·
Key Change: Voluntary Retention Route (VRR)
o
From April 1, 2026:
§ All
existing & new VRR investments will now fall under General Route limits.
·
Revised Investment Limits (₹ Crore)
For
Apr–Sept 2026:
o
Total Debt Limit: ₹15,51,646 crore
o
Corporate Bonds: ₹9,36,113 crore
o
G-Sec (General + Long-term): Increased
proportionately
For Oct
2026–Mar 2027:
o
Total Debt Limit: ₹16,32,640 crore
o
Corporate Bonds: ₹9,91,392 crore
o
Further increase across G-Secs and SGSs
·
Credit Default Swaps (CDS) Limit
o
FPIs can sell CDS up to 5% of corporate bond
stock
o
Additional limit set at ₹3,30,464 crore
for FY 2026–27
·
Operational Instructions
o
AD Category-I banks to inform clients and
stakeholders.
·
Withdrawal of Previous Circular
o
Circular for FY 2025–26 investment limits stands withdrawn.
·
Legal Basis
o
Issued under Sections 10(4) and 11(1)
of the Foreign Exchange Management
Act, 1999.
[A.P. (DIR Series) Circular
No. 05 dated April 06, 2026]
Attention of Authorised
Dealer Category-I (AD Category-I) banks is invited to Schedule 1 to the Foreign
Exchange Management (Debt Instruments) Regulations, 2019 notified vide
Notification No. FEMA. 396/2019-RB dated October 17, 2019 as amended from time
to time and the relevant Directions issued thereunder. Reference is also
invited to the Master Direction - Reserve Bank of India (Non-resident
Investment in Debt Instruments) Directions, 2025 dated January 07, 2025;
[hereinafter “Master Direction”] and the A.P. (DIR Series) Circular No. 01
dated April 03, 2025.
a)
The limits for FPI investment in Government Securities (G-Secs), State Government Securities (SGSs) and corporate bonds shall remain unchanged at 6
per cent, 2 per cent and 15 per cent respectively, of the outstanding stocks of
securities for 2026-27 for the
General Route.
b)
The allocation of incremental changes in the G-Sec limit (in absolute terms) over the two sub-categories –
‘General’ and ‘Long-term’ – has been retained
at 50:50 for
2026-27.
c)
The entire increase in limits for SGSs (in absolute terms) has been added to the ‘General’ sub-category of SGSs.
d)
As hitherto, all investments by eligible investors in the ‘specified securities’ shall be reckoned
under the Fully Accessible Route (FAR).
(e) With effect from April 01, 2026, all existing and future investments under the Voluntary Retention Route shall be subject to the investment limits stipulated for FPI investments
under the General
Route.
3. The revised limits (in absolute
terms) for the different categories, are in Table 1:
|
all figures in ₹ Crore |
||||||
|
|
G-Sec General |
G-Sec Long Term |
SGS General |
SGS Long Term |
Corporate Bonds |
Total Debt |
|
Current FPI limits |
2,89,488 |
1,58,488 |
1,34,744 |
7,100 |
8,80,835 |
14,70,655 |
|
Revised limit for the HY Apr 2026-Sept 2027 |
2,96,745 |
1,65,745 |
1,45,943 |
7,100 |
9,36,113 |
15,51,646 |
|
Revised limit for the HY Oct 2026-Mar 2027 |
3,04,003 |
1,73,003 |
1,57,142 |
7,100 |
9,91,392 |
16,32,640 |
4. In terms of A.P. (DIR
Series) Circular No. 23 dated February 10, 2022, the aggregate limit of the notional
amount of Credit Default Swaps sold by FPIs shall be 5 per cent of the
outstanding stock of corporate bonds. Accordingly, an additional limit of ₹3,30,464
crore is set out for 2026-27.
5. AD Category – I banks may bring the
contents of this circular to the notice of their constituents and customers
concerned.
6. The A.P. (DIR Series) Circular No. 01
dated April 03, 2025, which notified the limits for investment in debt
instruments and sale of Credit Default Swaps by FPIs for financial year 2025-26
stands withdrawn.
7. The Directions contained in this
circular have been issued under sections 10(4) and 11(1) of the Foreign
Exchange Management Act, 1999 (42 of 1999) without prejudice to
permissions/approval, if any, required under any other law.