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The Reserve Bank of India eases norms for short-term investments by Foreign Portfolio Investors under the general route

The Reserve Bank of India (“RBI”), vide its notification dated May 8, 2025 (“Notification”), has provided significant relaxations relating to investments by Foreign Portfolio Investors (“FPIs”) in corporate debt securities under the general route.

Under the Notification, the RBI has immediately withdrawn the short-term investment limit and concentration limit applicable on investments made by FPIs in corporate debt securities under the general route. Earlier, the FPIs were permitted to invest only up to: (a) 30% of their total investments in short-term corporate debt securities (i.e., corporate debt securities with a residual maturity of up to 1 (one) year); and (b) 15% of the prevailing investment limit for corporate debt securities for long-term FPIs (i.e., Sovereign Wealth Funds, Multilateral Agencies, Pension/Insurance/Endowment Funds and foreign Central Banks), and 10% of the prevailing investment limit for corporate debt securities for other FPIs.

RBI has also revised the Master Direction – Reserve Bank of India (Non-resident Investment in Debt Instruments) Directions, 2025 to incorporate this revision.

Conclusion

The relaxations provided by the RBI simplifies the regulatory framework and provides FPIs with a greater flexibility to structure their investments. This change is also expected to promote foreign inflows in the Indian corporate debt security market.

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