The Reserve Bank of India (“RBI”), in exercise of powers conferred under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999, vide Circular No. RBI/2025-26/35,[1] dated May 08, 2025, has issued a circular easing restrictions on Foreign Portfolio Investors (“FPIs”) investing in corporate debt securities under the General Route, pursuant to a review aimed at enhancing ease of investment and capital market access (“Circular”). These relaxations take immediate effect and have been incorporated into the updated Master Direction – Non-resident Investment in Debt Instruments, 2025, as issued on January 07, 2025 (“Master Directions”).
Key highlights of the Circular are as follows:
- Withdrawal of Short-Term Investment Limit: The requirement that FPI investments in corporate debt shall be subject to a short-term investment limit, as outlined in para 4.4(iii) of the Master Directions, has now been withdrawn.
- Removal of Concentration Limit: The restriction on FPIs regarding the maximum investment in a single corporate issuer’s securities i.e., concentration limit under para 4.4(v) of the Master Directions has also been withdrawn.
[1] https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12847&Mode=0