What changed
RBI removed three investment limits for FPIs in government securities under the General Route: short-term limit, security-wise limit, and concentration limit. It merged the 'general' and 'long-term' sub-categories into a single limit for Central and State Government Securities, with revised FY2026-27 limits. Additionally, new 15-year, 30-year, and 40-year government securities, all new Sovereign Green Bond tenors, and three existing securities were designated as 'specified securities' under the Fully Accessible Route.
What it means for you
Banks and AD Category-I entities will see increased FPI inflows into government securities as compliance burdens ease. The merger of sub-limits simplifies monitoring, while FAR expansion opens up longer-tenor and green bond investments, deepening the bond market. Banks must update their systems to reflect the removal of limits and new FAR securities.
What you must do
- Update internal systems to remove short-term, security-wise, and concentration limit checks for FPI investments in government securities under the General Route.
- Revise reporting frameworks to reflect the merged single limit for Central and State Government Securities for FY2026-27.
- Inform FPI clients about the new 'specified securities' under the Fully Accessible Route, including the listed ISINs.
- Ensure compliance with the updated Master Direction and circular effective immediately.
Who it affects
Authorised Dealer Category-I banks, Foreign Portfolio Investors, Government securities market participants
What specific limits have been removed for FPIs under the General Route?
The short-term investment limit, security-wise limit, and concentration limit for FPI investments in government securities have been withdrawn.
What are the new investment limits for Central and State Government Securities for FY2026-27?
For Central Government Securities, the limit is ₹4,62,490 crore for Apr-Sep 2026 and ₹4,77,006 crore for Oct 2026-Mar 2027. For State Government Securities, it is ₹1,53,043 crore and ₹1,64,242 crore respectively.
Which new securities are added to the Fully Accessible Route?
All new issuances in 15-year, 30-year, and 40-year government securities; all new Sovereign Green Bonds in 5, 7, 10, 15, 30, and 40-year tenors; and three existing securities with specific ISINs.