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FPIs Now Allowed to Invest in InvIT and REIT Debt Securities

Current · Source: Reserve Bank of India · RBI/2021-22/120 · issued 08 Nov 2021 · ~2 min read

Quick answerRBI now permits FPIs to invest in debt securities issued by InvITs and REITs under the Medium-Term Framework or Voluntary Retention Route, effective from October 21, 2021. This follows the Union Budget 2021-22 announcement and amendments to FEMA Debt Instruments Regulations.

The rule, in the simplest words

FPIs can now invest in debt securities issued by InvITs and REITs under MTF or VRR.
FPI investments in InvIT and REIT debt securities must be facilitated by AD Category-I banks within existing MTF and VRR limits.
Lenders must update their compliance and reporting systems to handle these new investment types.

How it plays out — a real example

Amit, a forex & trade-finance officer in Indore, helps a foreign investor understand the new rules for investing in InvIT debt securities. He explains that the investor can now invest in these securities under the Medium-Term Framework (MTF) or the Voluntary Retention Route (VRR), and that the investment will be subject to certain limits and conditions. Amit ensures that the investor's investment is facilitated within the existing MTF and VRR limits, and updates his compliance and reporting systems to handle this new investment type.

What changed

RBI has allowed FPIs to invest in debt securities issued by Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs). This investment can be made under the Medium-Term Framework (MTF) or the Voluntary Retention Route (VRR). The change was notified via amendments to the Foreign Exchange Management (Debt Instruments) Regulations, 2019 on October 21, 2021.

What it means for you

Banks and AD Category-I entities must now facilitate FPI investments in InvIT and REIT debt securities within existing MTF and VRR limits and conditions. This opens a new avenue for foreign capital into infrastructure and real estate debt markets, potentially increasing demand for such instruments. Lenders should update their compliance and reporting systems to handle these new investment types.

What you must do

Update internal systems to recognize InvIT and REIT debt securities as eligible for FPI investment under MTF and VRR.
Inform customers and constituents about the new investment option and applicable limits.
Ensure compliance with existing MTF and VRR terms and conditions for these investments.
Monitor FPI investment limits under MTF and VRR to avoid breaches.

Who it affects

AD Category-I banks, Foreign Portfolio Investors (FPIs), Infrastructure Investment Trusts (InvITs), Real Estate Investment Trusts (REITs)

❓ Common questions

Regulatory timeline

Stated effective date effective from October 21, 2021
Decoded by BankPulse 2026-06-18 07:15 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

Can FPIs invest in InvIT and REIT debt under any route?

Yes, FPIs can invest in debt securities issued by InvITs and REITs under the Medium-Term Framework (MTF) or the Voluntary Retention Route (VRR), subject to the limits and conditions of those routes.

When did this change become effective?

The amendments to the FEMA (Debt Instruments) Regulations, 2019 enabling this were notified on October 21, 2021, and the circular was issued on November 8, 2021.

Do these investments count against existing FPI debt limits?

Yes, such investments are reckoned within the existing limits for FPI investments in debt securities under the MTF and VRR frameworks.

📜 Read the original circular — full text as issued by RBI

RBI/2021-22/120
 A.P. (DIR Series) Circular No. 16
 November 08, 2021
 To
 All Authorised Persons
 Madam / Sir
 Investment by Foreign Portfolio Investors (FPIs) in Debt – Review
 Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to Schedule 1 to the Foreign Exchange Management (Debt Instruments) Regulations, 2019 notified vide Notification No. FEMA.396/2019-RB dated October 17, 2019 , as amended from time to time and the relevant Directions issued thereunder.
 2. A reference is also invited to the following Directions issued by the Reserve Bank:
 a. A.P. (DIR Series) Circular No. 31 dated June 15, 2018 , as amended from time to time; and 
 b. A.P. (DIR Series) Circular No. 34 dated May 24, 2019 , as amended from time to time.
 3. An announcement was made in the Union Budget 2021-22 that debt financing of Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) by Foreign Portfolio Investors (FPIs) will be enabled by making suitable amendments in the relevant legislations. Accordingly, it has been decided to permit FPIs to invest in debt securities issued by InvITs and REITs. Necessary amendments to Foreign Exchange Management (Debt Instruments) Regulations, 2019 ( Notification No. FEMA 396/2019-RB dated October 17, 2019 ) have been notified on October 21, 2021 and are annexed to this circular.
 4. FPIs can acquire debt securities issued by InvITs and REITs under the Medium-Term Framework (MTF) or the Voluntary Retention Route (VRR). Such investments shall be reckoned within the limits and shall be subject to the terms and conditions for investments by FPIs in debt securities under the respective regulations of MTF and VRR. 
 5. AD Category-I banks may bring the contents of the circular to the notice of their customers/constituents concerned.
 6. The Directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.
 Yours faithfully
 (Dimple Bhandia)
 Chief General Manager

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2021-22/120 · issued 08 Nov 2021. The plain-English explanation above is BankPulse’s own independent summary.

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Who does what — compliance checklist

💻 IT / Systems

Update internal systems to recognize InvIT and REIT debt securities as eligible for FPI investment under MTF and VRR.

📜 Compliance

Inform customers and constituents about the new investment option and applicable limits.
Ensure compliance with existing MTF and VRR terms and conditions for these investments.
Monitor FPI investment limits under MTF and VRR to avoid breaches.

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 (AD Category-I banks, Foreign Portfolio Investors (FPIs), Infrastructure Investment Trusts (InvITs), Real Estate Investment Trusts (REITs)), your first concrete step on “FPIs Now Allowed to Invest in InvIT and REIT Debt Securities” is: “Update internal systems to recognize InvIT and REIT debt securities as eligible for FPI investment under MTF and VRR.” (RBI issued this 08 Nov 2021).

Circular: RBI/2021-22/120 -- FPIs Now Allowed to Invest in InvIT and REIT Debt Securities
Issued: 08 Nov 2021
Action required: Update internal systems to recognize InvIT and REIT debt securities as eligible for FPI investment under MTF and VRR.
Action required: Inform customers and constituents about the new investment option and applicable limits.
Action required: Ensure compliance with existing MTF and VRR terms and conditions for these investments.
Action required: Monitor FPI investment limits under MTF and VRR to avoid breaches.
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.

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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=12188&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.