Reserve Bank of India permits Special Rupee Vostro Account holders to invest rupee surpluses in Indian corporate bonds and commercial paper

The Reserve Bank of India issued foreign exchange directions expanding how persons resident outside India can deploy rupee surplus balances held in Special Rupee Vostro Accounts (SRVAs) used for rupee-denominated international trade settlement. In addition to Central Government securities (including Treasury Bills), SRVA holders are now permitted to invest those balances in non-convertible debentures or bonds and commercial papers issued by Indian companies, with corresponding updates to the RBI’s Non-resident Investment in Debt Instruments Directions. Investments in these corporate instruments must be reckoned under the corporate debt securities investment limit under the General Route and are otherwise subject to the investment limits and stipulations applicable to foreign portfolio investor investments under that route. However, the minimum residual maturity requirement and the issue-wise limit referenced in the Directions do not apply to investments made under the SRVA route. Authorised Dealer Category-I banks must facilitate opening separate demat accounts for SRVA holders for these investments and report the transactions to SEBI-registered depositories, while SRVA holders and the banks where the accounts are maintained have primary responsibility for compliance with applicable limits. The instructions apply with immediate effect, and AD Category-I banks are asked to notify relevant customers.