Mumbai, June 5: The Governor of the Reserve Bank of India (RBI), Sanjay Malhotra, announced on Friday that the investment limit for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) in equity instruments traded in the stock market will be increased without the need for Securities and Exchange Board of India (SEBI) registration.
In his address following the Monetary Policy Committee (MPC) meeting, he stated that this facility will now also be available to all individual foreign resident persons (PROIs), similar to NRIs and OCIs.
Malhotra mentioned that to encourage external commercial borrowing (ECB) by public sector undertakings (PSUs), a concessional foreign exchange swap facility will be available until September 30, 2026. Additionally, authorized dealer (AD) banks will also be given the same facility to bear the full hedging cost for raising new Foreign Currency Non-Resident (FCNR(B)) deposits for a period of 3 to 5 years until September 30, 2026.
To attract foreign capital, the RBI has decided to expand the scope of “specified securities” under the Fully Accessible Route (FAR) for government securities. This will include all new government securities (G-secs) with maturities of 15, 30, and 40 years.
Malhotra announced that the limits on short-term investments, investment concentration, and individual securities for Foreign Portfolio Investors (FPIs) under the General Route will also be removed.
He stated that these measures, along with the tax benefits announced by the government earlier on Friday, will help attract foreign capital for government borrowing.
The RBI Governor proposed extending the deadline for receiving export earnings to nine months. He expressed hope that these measures would strengthen the country’s balance of payments. He also emphasized the commitment to continue making necessary policy changes to promote exports and attract capital flows.
Sanjay Malhotra clarified that there has been no change in India’s exchange rate policy. He stated, “We do not target any specific exchange rate or its range. The exchange rate is allowed to be determined by market forces.”
However, he acknowledged that increased uncertainty can sometimes lead to market fluctuations that do not align with economic fundamentals and can impact economic activities.
The RBI Governor noted that while the central bank does not aim to prevent natural market adjustments, necessary steps will be taken to manage excessive volatility and disorderly market activities. He emphasized that the RBI will remain vigilant in maintaining stability in financial markets and preventing unnecessary fluctuations.
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