RBI Allows SRVA Holders to Invest Surplus in NCDs and CPs

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  • Last Updated on 6 October, 2025

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RBI SRVA investment in NCDs

Circular No. RBI/2025-26/90 A.P. (DIR Series) Circular No. 13; Dated: 03.10.2025

1. Introduction

The Reserve Bank of India (RBI) has introduced a significant measure to enhance the utility of Special Rupee Vostro Accounts (SRVAs) by permitting Persons Resident Outside India (PROIs) holding such accounts to invest their surplus rupee balances in corporate debt instruments. This development forms part of RBI’s broader strategy to deepen the rupee settlement mechanism and strengthen India’s financial integration with global markets.

2. Permitted Instruments for Investment

Under the revised guidelines, SRVA holders are now allowed to invest their surplus rupee funds in a range of corporate debt instruments, including non-convertible debentures (NCDs), corporate bonds, and commercial papers issued by Indian companies. This move opens a new investment avenue for foreign entities and helps channelize rupee liquidity into India’s debt market, potentially boosting demand for high-quality corporate debt instruments.

3. Regulatory Classification and Applicability

RBI has clarified that investments made by SRVA holders in corporate debt instruments will be treated as part of the General Route limit for Foreign Portfolio Investors (FPIs). However, to encourage wider participation and reduce administrative hurdles, the minimum residual maturity and issue-wise investment limits that normally apply to FPIs will not apply to SRVA-based investments. This provides SRVA investors with greater flexibility compared to standard FPI investors.

4. Implications for Market and Participants

This policy reform is expected to support the development of India’s corporate bond market by increasing the participation of offshore entities using rupee settlement mechanisms. It will also help absorb surplus rupee balances held by foreign trading partners in SRVAs, creating a productive investment channel instead of idle balances. For Indian corporates, the move could lead to improved access to long-term capital and greater diversification of their investor base.

5. Conclusion

In conclusion, RBI’s decision to allow SRVA holders to invest in Indian corporate debt marks an important step toward internationalizing the Indian rupee and promoting India as an attractive destination for global investors. By relaxing certain FPI restrictions and broadening the scope of permissible investments, this initiative not only strengthens financial linkages with trading partners but also enhances liquidity, depth, and resilience in India’s debt markets.

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied