RBI lifts cap on foreign bond investments via lock‑in route

India's central bank has removed ‍the limit of Rs 2.5 lakh crore ($27.70 billion) for investments in ⁠debt securities under the voluntary retention route (VRR), the Reserve Bank of India governor said on Friday.

"Investment through ‌the ‌VRR in each category of securities will be subject to ‌the investment ceiling for the respective category under the General Route," Sanjay Malhotra said in his monetary policy address.

India devised the VRR route to attract long-term, stable foreign debt flows by exempting VRR investments from certain ‌restrictions ‍in return for a lock-in commitment.


Foreign ‍investors have to remain committed for ‌at least three years for their debt investments under the VRR route.

"After the inclusion of government bonds in three global indexes, the preference for using this window has reduced, and removing the limit ‍will not trigger a major surge in inflows that are otherwise not forthcoming," ‍a senior ⁠treasury official ⁠said.

Foreign investors have been net sellers of 9 billion rupees of debt in the current financial year, after buying 67 billion rupees in the previous fiscal year and selling a net 30 billion rupees in 2023–24, depository data showed.