The central bank widens access to government bonds, eases equity investment rules and introduces concessional forex swaps as emerging market currencies face pressure
The Reserve Bank of India has announced a broad set of measures designed to attract foreign capital, deepen domestic markets and improve foreign exchange liquidity, as global volatility and weakness in emerging market currencies intensify pressure on the rupee.
The key measures, announced on June 5, cover four areas.
Government bond market access
The RBI has expanded its fully accessible route to include all new 15-year, 30-year and 40-year government securities, up from a previous limit of 10-year tenors. Investment concentration limits under this route have also been removed to encourage broader foreign participation. The government has separately introduced tax benefits on government securities to support foreign investor interest.
Equity investment rules
Investment limits for non-resident Indians and overseas citizens of India in listed equity instruments have been increased, removing the requirement for SEBI registration. The same access has been extended to all individuals resident outside India, aligning their rights with those available to overseas citizens of India.
Foreign exchange liquidity
A concessional forex swap facility will be offered to the market. Banks raising foreign currency non-resident deposits will receive full hedging cost support, reducing the effective cost of mobilising overseas deposits.
Export realisation timelines
The period allowed for realising export proceeds has been restored to nine months, reversing a temporary extension to 15 months that had been granted during an earlier period of elevated global uncertainty.
The RBI was clear that its exchange rate policy remains unchanged. The central bank does not target a specific level or band for the rupee and will continue to allow market forces to set the rate, intervening only to curb excessive volatility. Foreign exchange reserves stand at $682.3 billion, equivalent to roughly 11 months of import cover.