The Reserve Bank of India issued a circular for FY 2026–27 specifying limits for Foreign Portfolio Investor (FPI) investments in debt instruments and sale of Credit Default Swaps (CDS). The investment limits under the General Route remain unchanged at 6% for Government Securities (G-Secs), 2% for State Government Securities (SGSs), and 15% for corporate bonds. Incremental changes in G-Sec limits will continue to be equally divided between ‘General’ and ‘Long-term’ categories, while increases in SGS limits will be allocated entirely to the ‘General’ category. Investments in specified securities will continue under the Fully Accessible Route (FAR). Additionally, all investments under the Voluntary Retention Route (VRR) will now be subject to General Route limits. The aggregate CDS selling limit for FPIs is set at 5% of outstanding corporate bonds, amounting to ₹3,30,464 crore. The circular also withdraws the previous year’s guidelines and reinforces regulatory continuity under FEMA provisions.
RESERVE BANK OF INDIA
RBI/2026-27/07
A.P. (DIR Series) Circular No. 05 | Dated: April 06, 2026
To,
All Authorised Persons
Madam / Sir
Limits for investment in debt and sale of Credit Default Swaps by Foreign Portfolio Investors (FPIs)
Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to Schedule 1 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 and the relevant Directions issued thereunder. Reference is also invited to the Master Direction – Reserve Bank of India (Non-resident Investment in Debt Instruments) Directions, 2025 dated January 07, 2025; [hereinafter “Master Direction”] and the A.P. (DIR Series) Circular No. 01 dated April 03, 2025.
2. Investment Limits for the financial year 2026-27:
a. The limits for FPI investment in Government Securities (G-Secs), State Government Securities (SGSs) and corporate bonds shall remain unchanged at 6 per cent, 2 per cent and 15 per cent respectively, of the outstanding stocks of securities for 2026-27 for the General Route.
b. The allocation of incremental changes in the G-Sec limit (in absolute terms) over the two sub-categories – ‘General’ and ‘Long-term’ – has been retained at 50:50 for 2026-27.
c. The entire increase in limits for SGSs (in absolute terms) has been added to the ‘General’ sub-category of SGSs.
d. As hitherto, all investments by eligible investors in the ‘specified securities’ shall be reckoned under the Fully Accessible Route (FAR).
e) With effect from April 01, 2026, all existing and future investments under the Voluntary Retention Route shall be subject to the investment limits stipulated for FPI investments under the General Route.
3. The revised limits (in absolute terms) for the different categories, are in Table 1:
| Table – 1: Investment limits for FY 2026-27 | ||||||
| all figures in ₹ Crore | ||||||
| G-Sec General |
G-Sec Long Term |
SGS General | SGS Long Term |
Corporate Bonds | Total Debt | |
| Current FPI limits |
2,89,488 | 1,58,488 | 1,34,744 | 7,100 | 8,80,835 | 14,70,655 |
| Revised limit for the HY Apr 2026-Sept 2027 | 2,96,745 | 1,65,745 | 1,45,943 | 7,100 | 9,36,113 | 15,51,646 |
| Revised limit for the HY Oct 2026-Mar 2027 | 3,04,003 | 1,73,003 | 1,57,142 | 7,100 | 9,91,392 | 16,32,640 |
4. In terms of A. P. (DIR Series) Circular No. 23 dated February 10, 2022,the aggregate limit of the notional amount of Credit Default Swaps sold by FPIs shall be 5 per cent of the outstanding stock of corporate bonds. Accordingly, an additional limit of ₹3,30,464 crore is set out for 2026-27.
5. AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
6. The A. P. (DIR Series) Circular No. 01 dated April 03, 2025, which notified the limits for investment in debt instruments and sale of Credit Default Swaps by FPIs for financial year 2025-26 stands withdrawn.
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.
Yours faithfully
(Dimple Bhandia)
Chief General Manager
