India's RBI maintains foreign portfolio investor debt limits at 6%/2%/15% for 2026-27
FPI managers must count Voluntary Retention holdings under debt limits from Apr 2026
Change
India's RBI maintained foreign portfolio investor (FPI) investment caps for 2026–27 — government securities 6%, state government securities 2%, corporate bonds 15% of outstanding stock — kept the G‑Sec incremental allocation at 50:50 between General and Long‑term and, with effect from April 1, 2026, brought all Voluntary Retention Route investments under those limits.
Why it matters
FPIs no longer have a separate bucket for Voluntary Retention holdings; those holdings consume the same statutory headroom as other FPI debt investments. The preserved 50:50 split for G‑Sec subcategories and the allocation of SGS increases to the General subcategory force rebalancing within fixed subcategory quotas when reallocating debt positions.
Implications
- — Foreign portfolio investor portfolio managers must reallocate or constrain debt purchases immediately — Voluntary Retention Route holdings are now counted against the 6%/2%/15% caps and purchases that would exceed those caps risk being blocked or disallowed.
- — Compliance and trade desks at Authorised Dealer Category‑I (AD Category‑I) banks must apply the revised cap checks in pre‑trade and settlement controls from April 1, 2026 — transactions breaching the statutory limits must be prevented.
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Source
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