RBI Scraps FPI Short-Term and Concentration Limits in Debt
Why in the news
In May 2025, RBI scrapped two restrictions on foreign portfolio investors in corporate bonds.
Old versus new
| Rule | Earlier | Now |
|---|---|---|
| Short-term cap | 30% of corporate debt holdings in paper up to one year residual maturity | None |
| Concentration, long-term FPIs | 15% of prevailing limit | None |
| Concentration, other FPIs | 10% of same limit | None |
Key facts
- FPIs may now hold any share in short-maturity corporate debt.
- Single-investor exposure limits no longer bind FPIs and related entities.
Objective and impact
- Greater ease and more foreign inflows, supporting a deeper domestic corporate bond market.
- May improve liquidity and long-term capital formation in debt.
Exam angle
- Numbers to recall: 30%, 15%, 10%.