RBI keeps FPI invest limit for gilts unchanged

New Delhi

The Reserve Bank of India (RBI) on Monday kept the limit on foreign portfolio investment (FPI) in government bonds unchanged at 6% of outstanding stock under the general route for the financial year 2026-27. This follows the subsuming of the voluntary retention route (VRR) category into the general route starting April 1.

"With effect from April 1, 2026, all existing and future investments under the Voluntary Retention Route shall be subject to the investment limits stipulated for FPI investments under the General Route," the RBI said in a release on Monday. The central bank had earlier notified the change in February. The RBI introduced the VRR in March 2019 to provide an additional channel for FPIs with long-term investment interests in Indian debt markets.

Clearing Corp of India (CCIL) data for April 2 showed an allotment of ₹1.88 lakh crore under the VRR, against the total limit of ₹2.50 lakh crore until March 30. However, the data showed utilisation of the VRR at only ₹586 crore under the general route.

The FPI limits for state and corporate bonds were also unchanged at 2% and 15% of outstanding stock, respectively. The increase in limits in absolute terms will be split equally between the 'general' and 'long-term' categories for gilts, while the entire increase in limits for state bonds will be added to the 'general' category, the RBI said.

The unchanged share of the investment cap will set the FPI limit for gilt investments under the general limit at ₹2.97 lakh crore in April-September and ₹3.04 lakh crore in October-March. As of March 30, only 17.8% of the ₹2.88 lakh crore investment cap was in use under the general route, CCIL data showed.