Master Direction - Reserve Bank of India (Non-resident Investment in Debt Instruments) Directions, 2025 (Updated as on June 05, 2026)
UR
- Applies toAll regulated entities
- StatusIn force
- IssuedJan 07, 2025
- Amendmentsnone tracked
- Length25 points in 2 sections · 3 min read
The four dates on this rule
- PublishedJan 07, 2025The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyJan 07, 2025The day this rule starts to apply, as RBI's own text states it.
- Time to get readyNoneIt starts to apply on the day it was published.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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Must know
1. 6% limit, government bonds
Foreign investors may hold up to 6% of central government bonds under the general route.
2. 2% limit, state bonds
State government bonds carry a separate 2% limit for foreign investors.
3. 15% limit, corporate bonds
Corporate bonds allow foreign investors up to 15% of the outstanding stock.
4. One year minimum maturity
A foreign investor may buy corporate bonds only with more than one year left to run.
5. 50% limit, one bond issue
One investor and its related investors may not hold more than half of any single bond issue.
6. Repos capped at 10%
Repo borrowing under this route may not exceed 10% of the investor's own holdings.
7. 50% cap per allotment round
One investor may not win more than half of any single allotment round.
8. Three year retention period
The shortest commitment period under this route is three years.
9. 75% invested within three months
A VRR investor must put in at least 75% of its committed money within three months.
10. Stay at 75% throughout
The investor must stay at 75% invested for the whole commitment period.
11. Custodian blocks early withdrawal
The custodian blocks a withdrawal that would drop holdings below the 75% minimum.
12. FPI may exit route early
An FPI may exit the VRR early by selling its holdings to another FPI.
13. FPIs, NRIs and OCIs eligible
Foreign portfolio investors, non-resident Indians and overseas citizens of India can use this route.
14. Vostro route, eligible instruments
Rupee-surplus vostro accounts may buy government bonds and select company debt.
15. NRIs face no investment limit
Non-resident Indians investing in debt instruments face no limit under these rules.
16. Bank may lend for margin
The bank may lend an investor money to place margin with the clearing corporation.
17. Trades settle T+1 or T+2
Government bond trades settle on a T+1 or T+2 basis.
18. Investments counted at face value
Investments are counted at their face value.
19. RBI may demand information
RBI may ask any investor or custodian for information it needs.
20. RBI may publish anonymised data
RBI may publish data on non-resident trades, with no names attached.
21. Breaches must be reversed
A trade that breaks the investment limit is not accepted, and must be undone.
22. FEMA rules still apply
FEMA's other rules still apply on top of these Directions.
Do it
1. Separate rupee account needed
The investor must open a separate rupee account for this route's money.
2. Trades reported within three hours
Off-market government bond trades must be reported within three hours of trading close.
3. Minor slip, five day fix
A small, unintended violation can be fixed within five working days, with the custodian's approval.