RBI Permits Investment in Corporate Debt Securities through Special Rupee Vostro Account
The Reserve Bank of India (RBI) has introduced a significant enhancement to the investment framework for persons resident outside India maintaining a Special Rupee Vostro Account (SRVA). Earlier, SRVA holders were permitted to invest rupee surplus balances solely in Central Government Securities, including Treasury Bills. Through its recent update to the Master Direction — Non-resident Investment in Debt Instruments, 2025, RBI now allows these balances to be invested in non-convertible debentures/bonds and commercial papers issued by Indian companies.
This amendment aligns with the broader policy objective of deepening India’s corporate debt market and facilitating greater participation by foreign investors in Indian currency assets. The change broadens the scope of “eligible instruments” under SRVA and strengthens the role of SRVA as a channel for overseas investors to access Indian capital markets.
Key changes introduced include:
- Expansion of Eligible Instruments
The Master Direction now replaces the term “Government Securities” with “eligible instruments” to explicitly include corporate debt securities such as non-convertible debentures/bonds and commercial papers issued by Indian companies. - Investment under General Route Limits
Investments via SRVA in these instruments will be counted under the investment limits for corporate debt securities prescribed under the General Route for Foreign Portfolio Investors (FPIs). However, certain restrictions, such as minimum residual maturity requirements and issue-wise limits, will not apply to SRVA investments. - Compliance Responsibility
The primary responsibility for ensuring compliance with applicable investment limits rests jointly with the SRVA holders and the Authorised Dealer (AD) Category-I banks where such accounts are maintained. - Operational and Reporting Requirements
AD Category-I banks are required to facilitate the opening of separate demat accounts for SRVA holders to hold these investments. They must also report SRVA transactions in corporate debt securities to SEBI‑registered depositories to ensure compliance with investment limits.
These changes, effective immediately, enhance flexibility for overseas investors in managing rupee-denominated assets and open a new channel for participation in India’s corporate debt market.
AD Category-I banks are advised to communicate these updates to relevant constituents and customers. The RBI has issued these directions under the Foreign Exchange Management Act, 1999, without prejudice to any other approvals required under applicable law.
This development is a notable step toward integrating India’s debt market with global investors, strengthening rupee internationalisation, and diversifying foreign participation in the Indian economy.
