Circular No. RBI/2025-26/90 A.P. (DIR Series) Circular No. 13; Dated: 03.10.2025
1. Introduction
The Reserve Bank of India (RBI) has introduced a significant measure to enhance the utility of Special Rupee Vostro Accounts (SRVAs) by permitting Persons Resident Outside India (PROIs) holding such accounts to invest their surplus rupee balances in corporate debt instruments. This development forms part of RBI’s broader strategy to deepen the rupee settlement mechanism and strengthen India’s financial integration with global markets.
2. Permitted Instruments for Investment
Under the revised guidelines, SRVA holders are now allowed to invest their surplus rupee funds in a range of corporate debt instruments, including non-convertible debentures (NCDs), corporate bonds, and commercial papers issued by Indian companies. This move opens a new investment avenue for foreign entities and helps channelize rupee liquidity into India’s debt market, potentially boosting demand for high-quality corporate debt instruments.
3. Regulatory Classification and Applicability
RBI has clarified that investments made by SRVA holders in corporate debt instruments will be treated as part of the General Route limit for Foreign Portfolio Investors (FPIs). However, to encourage wider participation and reduce administrative hurdles, the minimum residual maturity and issue-wise investment limits that normally apply to FPIs will not apply to SRVA-based investments. This provides SRVA investors with greater flexibility compared to standard FPI investors.
4. Implications for Market and Participants
This policy reform is expected to support the development of India’s corporate bond market by increasing the participation of offshore entities using rupee settlement mechanisms. It will also help absorb surplus rupee balances held by foreign trading partners in SRVAs, creating a productive investment channel instead of idle balances. For Indian corporates, the move could lead to improved access to long-term capital and greater diversification of their investor base.
5. Conclusion
In conclusion, RBI’s decision to allow SRVA holders to invest in Indian corporate debt marks an important step toward internationalizing the Indian rupee and promoting India as an attractive destination for global investors. By relaxing certain FPI restrictions and broadening the scope of permissible investments, this initiative not only strengthens financial linkages with trading partners but also enhances liquidity, depth, and resilience in India’s debt markets.
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