The Reserve Bank of India (RBI) has announced major amendments to the regulatory framework governing investments by Foreign Portfolio Investors (FPIs) in Government Securities.
The reforms, issued under the Foreign Exchange Management Act (FEMA), are designed to improve ease of investment, simplify compliance requirements, and strengthen India's appeal as a global investment destination.
Official copy of the notification is as follows
Investments by Foreign Portfolio Investors in Government Securities – Amendments to the regulatory framework
Attention of Authorised Dealer Category-I (AD Category-I) banks is invited 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; the Master Direction - Reserve Bank of India (Non-resident Investment in Debt Instruments) Directions, 2025 dated January 07, 2025 [hereinafter, ‘Master Direction’]; and A.P. (DIR Series) Circular No. 05 dated April 06, 2026 .
2. At present, investments by Foreign Portfolio Investors (FPIs) in Government Securities through the General Route are subject to (i) short-term investment limit, (ii) security-wise limit, and (iii) concentration limit. On a review, and with a view to providing greater ease of investment to FPIs, it has been decided to withdraw the requirement for FPIs to comply with the above three limits, for their investments in Government securities under the General Route.
3. It has also been decided to merge the sub-categories of investment limits, viz., 'general' and 'long-term' into a single limit for investment in Central Government Securities and State Government Securities (SGSs), respectively. The limits notified for investment in Central Government securities and SGSs for the financial year 2026-27 vide A.P. (DIR Series) Circular No. 05 dated April 6, 2026 , shall accordingly be modified as under:
| Investment limits for FY 2026-27 | ||
| all figures in ₹ Crore | ||
| Central Government Securities | State Government Securities | |
| Limit for the HY Apr 2026 – Sep 2026 | 4,62,490 | 1,53,043 |
| Limit for the HY Oct 2026 – Mar 2027 | 4,77,006 | 1,64,242 |
4. In addition, it has been decided to additionally designate the following instruments as ‘specified securities’ under the Fully Accessible Route (FAR):
a) Government Securities: All new issuances in 15-year, 30-year, and 40-year tenors.
b) Sovereign Green Bonds: All new issuances in 5-year, 7-year, 10-year, 15-year, 30-year, and 40-year tenors.
c) Existing Securities: Those listed in the table below.
| Table: Additional ‘specified securities’ under the FAR | ||
| Sr. No. | ISIN | Security |
| 1 | IN0020250042 | 6.68% GS 2040 |
| 2 | IN0020250075 | 7.24% GS 2055 |
| 3 | IN0020260033 | 7.71% GS 2066 |
5. The directions in this circular come into effect immediately. The updated Master Direction is enclosed herewith (the changes are tabulated in the Annex).
6. AD Category-I banks may bring the contents of these directions to the notice of their constituents.
7. 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) without prejudice to permissions/approval, if any, required under any other law.
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