The Reserve Bank of India issued an updated circular setting the limits for foreign portfolio investor (FPI) investment in Government Securities, State Government Securities and corporate bonds for FY 2026-27, and the aggregate limit for credit default swaps (CDS) sold by FPIs. Headline percentage caps are unchanged, while revised absolute limits are specified for two half-year tranches; from 1 April 2026, all existing and future investments under the Voluntary Retention Route are brought within the investment limits applicable to the General Route. The circular also withdraws the prior FY 2025-26 limits circular. Under the General Route, the FPI caps remain at 6% of outstanding Government Securities, 2% of outstanding State Government Securities and 15% of outstanding corporate bonds. Incremental changes in the Government Securities limit continue to be allocated 50:50 between the ‘General’ and ‘Long-term’ sub-categories, while the entire increase in State Government Securities limits (in absolute terms) is allocated to the ‘General’ sub-category, and investments in ‘specified securities’ continue to be reckoned under the Fully Accessible Route. In absolute terms, the total debt limit is set at INR 1,551,646 crore for the first half and INR 1,632,640 crore for the second half, with corresponding limits across G-Secs General and Long-term, SGS General and Long-term, and corporate bonds detailed in the circular. For CDS, the aggregate notional amount sold by FPIs remains capped at 5% of the outstanding stock of corporate bonds, with an additional limit of INR 330,464 crore set for 2026-27.

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