RBI restricts foreign investment in T-bills, short-term govt securities
Current · Source: Reserve Bank of India · RBI/2013-14/556 · issued 07 Apr 2014 · ~2 min read
Quick answerRBI has barred fresh foreign investment in T-bills and government securities with residual maturity below one year. Only dated securities with residual maturity of one year or more are now open to foreign investors. Existing short-term holdings must taper off on maturity or sale.
What changed
Previously, foreign investors could invest in T-bills and short-term government securities within a USD 30 billion overall limit, with a USD 5.5 billion sub-limit for T-bills. Now, RBI has prohibited fresh foreign investment in T-bills and government securities with residual maturity below one year. Only dated securities with residual maturity of one year or more are eligible, and existing short-term investments must taper off upon maturity or sale.
What it means for you
Banks and ADs must ensure that all new foreign portfolio investments in government securities are directed only to dated securities with residual maturity of at least one year. The move aims to encourage longer-term capital inflows and reduce reliance on short-term foreign money. Existing short-term holdings will gradually exit, potentially reducing volatility in the T-bill market.
What you must do
Update internal systems to block fresh foreign investment in T-bills and government securities with residual maturity below one year.
Inform FIIs, QFIs, and other eligible foreign investors about the revised eligibility criteria and the tapering-off mechanism for existing short-term holdings.
Monitor existing short-term investments to ensure they taper off on maturity or sale as directed.
Coordinate with SEBI for any operational guidelines on implementing the new investment limits.
Can foreign investors still invest in Treasury Bills?
No. Fresh investment in T-bills is prohibited. Only existing T-bill investments are allowed to taper off on maturity or sale.
What is the new residual maturity requirement for government securities?
All foreign investments in government dated securities must have a residual maturity of one year or more. Securities with less than one year residual maturity are not eligible for fresh investment.
Does this circular affect the overall USD 30 billion limit?
The overall limit remains USD 30 billion, but it now applies only to dated securities with residual maturity of one year or more. The earlier sub-limits for T-bills and short-term securities are effectively removed.
📜 Read the original circular — full text as issued by RBI
RBI/2013-14/556
A.P. (DIR Series) Circular No.118
April 07, 2014
To
All Category – I Authorised Dealer Banks
Madam / Sir,
Foreign investment in India in Government Securities
Please refer to paragraph 24 of first bi-monthly Monetary Policy statement, 2014-15.
2. Attention of AD Category-I banks is invited to A.P.(DIR Series) Circular No.94 dated April 1, 2013 read with A.P.(DIR Series) Circular No.111 dated June 12, 2013 and A.P.(DIR Series) Circular No.112 dated March 25, 2014 , in terms of which the present limit for investment in Government Securities by SEBI registered FIIs, QFIs, long term investors and FPIs registered in accordance with SEBI guidelines stands at USD 30 billion. Out of the above limit, a sub-limit of USD 5.5 billion is available for investment in Treasury Bills (T-bills). Further, in terms of A.P. (DIR Series) Circular No.99 dated January 29, 2014 , a sub-limit of USD 10 billion for investment in Government dated securities within the total limit of USD 30 billion is available to long term investors registered with SEBI – viz. Sovereign Wealth Funds (SWFs), Multilateral Agencies, Pension/ Insurance/ Endowment Funds and foreign Central Banks.
3. On a review, to encourage longer term flows, it has now been decided that foreign investment by all eligible investors including RFPIs shall henceforth be permitted only in Government dated securities having residual maturity of one year and above and existing investments in T-bills and Government dated securities of less than one year residual maturity shall be allowed to taper off on maturity/ sale.
The revised position in respect of the investment limit in Government dated securities is given below:
Instrument/s
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/556 · issued 07 Apr 2014. The plain-English explanation above is BankPulse’s own independent summary.
Update internal systems to block fresh foreign investment in T-bills and government securities with residual maturity below one year.
📜 Compliance
Inform FIIs, QFIs, and other eligible foreign investors about the revised eligibility criteria and the tapering-off mechanism for existing short-term holdings.
Monitor existing short-term investments to ensure they taper off on maturity or sale as directed.
Coordinate with SEBI for any operational guidelines on implementing the new investment limits.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are an IT/Systems lead at a bank this circular applies to (Category-I Authorised Dealer Banks, Foreign Portfolio Investors (FPIs, FIIs, QFIs), Long-term investors (SWFs, multilateral agencies, pension/insurance/endowment funds, foreign central banks), SEBI), your first concrete step on “RBI restricts foreign investment in T-bills, short-term govt securities” is: “Update internal systems to block fresh foreign investment in T-bills and government securities with residual maturity below one year.” (RBI issued this 07 Apr 2014).
Action required: Update internal systems to block fresh foreign investment in T-bills and government securities with residual maturity below one year.
Action required: Inform FIIs, QFIs, and other eligible foreign investors about the revised eligibility criteria and the tapering-off mechanism for existing short-term holdings.
Action required: Monitor existing short-term investments to ensure they taper off on maturity or sale as directed.
Action required: Coordinate with SEBI for any operational guidelines on implementing the new investment limits.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8828&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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