RBI announces measures to attract foreign capital, eases FPI investment norms
The Reserve Bank of India (RBI) announced several measures to attract foreign capital, particularly for government securities. Under the Fully Accessible Route (FAR), the RBI expanded the universe of 'specified securities' to include new issuances of 15, 30, and 40-year tenor G-secs. Additionally, limits on short-term investments, concentration, and individual securities for FPI investment under the General Route have been removed. These steps aim to make Indian government securities more tax-efficient and attractive for overseas investors. The RBI also decided to increase investment limits for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) in equity instruments traded on the stock market without SEBI registration, further liberalizing foreign investment.
Key Points
- RBI has expanded the scope of government securities under the Fully Accessible Route (FAR) to attract more foreign capital.
- Restrictions on Foreign Portfolio Investment (FPI) in government securities, such as limits on short-term investments and concentration, have been removed under the General Route.
- These measures are intended to enhance the attractiveness and tax efficiency of Indian government securities for overseas investors.
- Investment limits for NRIs and OCIs in equity instruments traded on the stock market have been increased, removing the need for SEBI registration.
- The central bank aims to boost foreign capital inflows to support government borrowing and overall economic stability.
Exam Facts
- Measures apply to government securities under the Fully Accessible Route (FAR).
- New issuances of 15, 30, and 40-year tenor G-secs are now included in specified securities.
- Limits removed for FPI investment under the General Route.
- Investment limits increased for NRIs and OCIs in equity instruments without SEBI registration.
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