RBI eased investment norms to attract foreign capital and support the rupee.
Foreign investors received wider access to government bonds and Indian equities.
RBI introduced incentives for overseas borrowing and foreign currency deposits.
The Reserve Bank of India on Friday announced a series of measures aimed at attracting foreign capital into the country, as policymakers seek to strengthen external finances and support the rupee amid rising global uncertainties.
Announcing the steps after the monetary policy decision, RBI Governor Sanjay Malhotra said the package includes easier access to government securities for foreign investors, relaxed investment rules for overseas Indians and foreign residents, and incentives for companies and banks to raise funds from international markets.
1 June 2026
Get the latest issue of Outlook Business
"All these measures together should help attract foreign capital for government borrowing," Malhotra said.
Easier Access To Govt Bonds
As part of the measures, the RBI expanded the Fully Accessible Route (FAR) by including all new issuances of 15-year, 30-year and 40-year government securities.
This allows foreign investors to invest in these bonds without being subject to investment caps.
The central bank also removed certain restrictions related to short-term holdings and concentration limits in individual government securities, making the debt market more accessible to overseas investors.
The announcement follows the government's decision earlier on Friday to provide tax incentives for investments in government securities as part of broader efforts to deepen foreign participation in India's debt market.
Support For Rupee
The measures come at a time when the rupee has faced pressure from elevated crude oil prices, foreign capital outflows and heightened global risk aversion linked to the conflict in West Asia.
As the world's third-largest oil importer, India remains particularly vulnerable to sustained increases in crude prices. Higher oil import costs increase demand for dollars and can widen the trade deficit, putting pressure on the domestic currency.
The RBI has been intervening in the foreign-exchange market to smooth volatility. By encouraging greater foreign participation across bonds, equities and overseas funding channels, policymakers hope to increase foreign currency inflows and support the rupee.
NRI Investment Norms Relaxed
The central bank also increased investment limits for non-resident Indians (NRIs) and overseas citizens of India (OCIs) in listed Indian equities without requiring registration with market regulator Sebi.
The facility has now been extended to all individual investors residing outside India, broadening the pool of potential overseas investors in Indian equities.
To encourage overseas borrowing, the RBI announced a concessional foreign-exchange swap facility until September 30 for external commercial borrowings raised by public sector companies.
A similar facility will be available for banks mobilising foreign currency non-resident deposits, with the RBI bearing the full hedging cost.
Export Rules Normalised
Separately, the central bank restored the timeline for exporters to repatriate export proceeds to nine months from the temporary 15-month period that had been allowed earlier.
Malhotra said the measures are expected to strengthen India's balance of payments position and improve capital inflows.
"We will continue to make the right policy adjustments as may be required to further promote exports and attract and incentivize capital inflows," he said.
Reiterating the RBI's position on currency management, the governor said the central bank does not target any specific exchange rate level.
"We do not target any specific level or band. Instead, we allow the exchange rate to be determined by market forces," Malhotra said.
However, he added that the RBI would continue to intervene to curb excessive volatility arising from speculation and uncertainty.
