RBI widens FAR, unveils other measures to attract foreign capital

The central bank expanded foreign investor access to government securities, eased FPI restrictions, enhanced NRI investment limits, and introduced forex incentives to attract overseas funds

The Reserve Bank of India (RBI) on Friday announced a series of measures aimed at attracting foreign capital inflows, including expanding foreign investor access to government securities under the Fully Accessible Route (FAR), easing investment restrictions for foreign portfolio investors (FPIs), enhancing investment limits for non-resident Indians (NRIs) and overseas citizens of India (OCIs), and providing temporary incentives for foreign currency fundraising.

 

Following the announcement, the yield on the benchmark 10-year government bond declined 3 basis points to 6.96 per cent.

 

As part of the measures, the RBI expanded the pool of securities eligible under the FAR by including all new issuances of 15-year, 30-year and 40-year government securities. The central bank also removed restrictions on short-term investments, concentration limits and individual security-wise investment limits applicable to FPIs investing through the General Route.

 

 

The RBI further enhanced investment limits for NRIs and OCIs in listed equity instruments without requiring registration with the Securities and Exchange Board of India (Sebi). The facility has also been extended to all individual Persons Resident Outside India (PROIs).

 

To facilitate foreign currency inflows, the central bank introduced concessional forex swap and hedging facilities until September 30, 2026, for external commercial borrowings (ECBs) raised by public sector undertakings and for mobilisation of Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits by banks.

 

In addition, the RBI proposed restoring the period for realisation and repatriation of export proceeds to nine months.

 

“While these measures are expected to strengthen our balance of payments, we will continue to make the right policy adjustments to further promote exports and attract and incentivise capital inflows,” RBI Governor Sanjay Malhotra said in the monetary policy statement.

 

The measures come against the backdrop of sustained foreign portfolio outflows. Between April 1 and June 2, 2026, FPIs pulled out a net $13.4 billion from equities and $0.3 billion from debt markets.

 

The RBI also highlighted recent progress on India's trade engagement with key partners. During the period, India signed trade agreements with the United Kingdom and New Zealand. Trade agreements with the European Free Trade Association (EFTA) and Oman came into force on October 1, 2025, and June 1, 2026, respectively.

 

India has also concluded negotiations for a trade agreement with the European Union, while discussions on an interim trade deal with the United States are continuing. Trade negotiations are also underway with Canada, Peru, Mexico, Bahrain, Qatar and South Korea.