RBI Unveils Measures To Attract Foreign Capital, Ease Investment Norms

(MENAFN- AsiaNet News)

The Reserve Bank of India on Friday unveiled a series of targeted regulatory changes designed to attract foreign capital and ease investment bottlenecks, expanding the scope of government securities available to international investors and easing limits for overseas individuals.

Measures to Boost Overseas Borrowing and Deposits

Delivering the Monetary Policy Statement, RBI Governor Sanjay Malhotra introduced temporary financial mechanisms to encourage overseas borrowing by public sector firms and boost foreign currency deposits through commercial banks. "A facility of concessional forex swap will be provided till 30th September 2026 to incentivize ECBs by PSUs," Malhotra said. External Commercial Borrowings (ECBs) are commercial loans raised by eligible Indian entities from recognized non-resident lenders, either in foreign currencies or Indian Rupees. They are used by corporations and Public Sector Undertakings (PSUs) to access global capital for expansion, infrastructure, and refinancing.

"A similar facility for bearing the full hedging cost shall be provided till 30th September 2026 to AD banks for raising fresh 3-5-year FCNR (B) deposits," the Governor added, while also noting that it is proposed to restore the time for realisation of export proceeds to nine months.

Malhotra explained that these domestic interventions are designed to buffer the country's external finances against broader global economic pressures, such as tariff disputes and fluctuating commodity prices.

Widening Foreign Access to Debt Markets

To widen the pool of foreign investment, the central bank also expanded the eligibility criteria for sovereign debt and dismantled several long-standing investment caps. "To attract foreign capital, I also have a few measures to announce today," Governor Sanjay Malhotra said.

Expanding G-Secs Under Fully Accessible Route

"For government securities under the Fully Accessible Route (FAR), we are expanding the universe of 'specified securities' by including all new issuances of 15-, 30- and 40-year tenor G-secs."

Removing FPI Investment Restrictions

The central bank chief added that additional structural restrictions on Foreign Portfolio Investors (FPIs) are being discarded to complement recent fiscal policy changes. "In addition, limits pertaining to short-term investment, concentration and individual securities on FPI investment under the General Route are being removed," Malhotra said. "These measures along with the tax benefits provided by the government this morning should help attract foreign capital for government borrowing."

Easing Access to Indian Equities for Individuals Abroad

Beyond the debt market, the RBI eased access to Indian equities for individual investors living abroad, aligning their investment limits with those of non-resident citizens. "The limits for investment by NRIs and OCIs in equity instruments traded on the stock market without SEBI registration are being increased," the Governor stated.

"Further, the same facility is being extended to all individual Persons Resident Outside India (PROIs) at par with NRIs and OCIs."

Malhotra noted that while these measures are expected to strengthen the country's balance of payments, "we will continue to make the right policy adjustments to further promote exports and attract and incentivise capital inflows." (ANI)

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)

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