The Reserve Bank of India announced a comprehensive package of measures on Friday to attract foreign capital inflows into the Indian financial markets. According to reports from Business Standard, the central bank expanded foreign investor access to government securities under the Fully Accessible Route (FAR), eased investment restrictions for foreign portfolio investors (FPIs), enhanced investment limits for non-resident Indians (NRIs) and overseas citizens of India (OCIs), and introduced temporary forex incentives for foreign currency fundraising. The latest developments include removing concentration limits under the General Route for FPIs investing in debt markets, as reported by CNBC TV18, giving foreign investors greater flexibility in allocating investments across eligible debt instruments. The government has also waived capital gains tax on foreign investments in government bonds effective April 1, 2026, as reported by Rediff Moneynews, providing additional incentives for foreign participation in India's sovereign debt market. As per ANI, RBI Governor Sanjay Malhotra emphasized that these measures are designed to strengthen the country's balance of payments and attract foreign capital for government borrowing. The combined impact of these measures is expected to attract up to $50 billion in foreign capital inflows, potentially covering most of India's anticipated balance of payments gap in 2026-27.
The Reserve Bank of India has proposed stricter disclosure requirements for deposit interest rates and a new framework allowing banks to offer differential rates on bulk deposits based on their liquidity risk profile. According to draft directions issued on Friday, banks will be required to publish their schedule of deposit interest rates on their websites before the commencement of each business day. Interest rates paid on deposits must strictly conform to the rates disclosed in advance, preventing banks from offering rates that have not been publicly announced. The RBI has now introduced a fourth factor for pricing bulk deposits - the run-off rate under the Liquidity Coverage Ratio (LCR) framework, expanding the pricing framework to reflect the stability of different types of deposits. As per The Times of India, this requires banks to disclose rates upfront each morning and prevents intra-day changes without prior visibility to customers, seeking to standardise access to information for depositors and reduce uncertainty in pricing. The draft amendment mandates that "Interest rates payable on deposits shall be strictly as per the schedule of interest rates disclosed in advance on the bank's website, before the commencement of the business day," ensuring transparency and uniformity in deposit pricing. The proposal primarily focuses on bulk deposits, which are large-value deposits accepted by banks, giving institutions greater flexibility in managing their deposit books based on funding needs and liquidity requirements. According to CNBC TV18, the RBI stated that the objective is to provide "greater flexibility to banks for pricing their rupee bulk deposits" and ensure "uniformity in the disclosure of interest rates on deposits."
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, including Sovereign Green Bonds in the tenors of FAR-eligible 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. According to Business Standard, these changes are expected to make it easier for foreign investors to access Indian government securities across different maturities. The latest announcement specifically removes concentration limits under the General Route, as reported by CNBC TV18, which gives FPIs greater flexibility in allocating investments across eligible debt instruments and reduces operational restrictions that have traditionally influenced foreign investor participation in the bond market. The government has also retained the overall quantitative investment limit of 6% of the outstanding stock of Central Government securities and 2% of state government securities (SGSs), while merging sub-categories of investment limits into a single limit for government securities and SGSs respectively. As per ANI, Governor Malhotra noted that these domestic interventions are designed to buffer the country's external finances against broader global economic pressures, such as tariff disputes and fluctuating commodity prices.
The RBI 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 been extended to all individual Persons Resident Outside India (PROIs). As reported by Business Standard, this move aims to simplify the investment process for non-resident Indians and overseas citizens seeking to invest in Indian equities. In line with Budget 2026-27 announcement, individual PROIs have been permitted to invest in equity instruments of listed Indian companies through the Portfolio Investment Scheme, which was hitherto available only to NRIs/OCIs. The investment limit has been increased for an individual PROI from 5% to 10% in any company, with an overall investment limit for all individual PROIs increased to 24% from the current 10%. According to Rediff Moneynews, this notification will facilitate a more proactive mobilisation of foreign portfolio capital by leveraging the existing onboarding systems, with simplified onboarding and reduced compliance requirements expected to enhance ease of doing business and attract a broader base of relatively stable individual foreign investors. As per ANI, the Governor stated that the limits for investment by NRIs and OCIs in equity instruments traded on the stock market without SEBI registration are being increased, with the same facility being extended to all individual Persons Resident Outside India (PROIs) at par with NRIs and OCIs.
While the biggest impact may be felt by large depositors, retail savers may also benefit from a more competitive deposit market over time. According to CNBC TV18, fixed deposits may no longer remain a simple "book-and-forget" product if the proposal is implemented in its current form. CFP Shweta Shastri advises that "earlier, rates were more or less similar across banks, but going forward, you might see noticeable differences based on deposit size, tenure, and even how urgently a bank needs funds at that point." She recommends that depositors compare rates before renewing FDs and, in the case of larger deposits, explore whether banks are willing to offer better rates, particularly through branch relationships or relationship managers. However, she cautions against chasing slightly higher returns without considering liquidity needs, as factors such as premature withdrawal penalties, sweep-in FD features, payout options and emergency fund requirements remain equally important when choosing an FD. The draft proposals are currently open for public feedback until June 20, 2026, after which the RBI will decide whether to implement the changes and in what form. As per The Times of India, the final directions will be issued after considering the feedback received during the consultation process.
