Non-residents with Special Rupee Vostro A/cs can Invest in Corporate Debt | Current Affairs | Vision IAS

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Non-residents with Special Rupee Vostro A/cs can Invest in Corporate Debt

1 min read

RBI Policy Update on SRVAs

The Reserve Bank of India (RBI) has made a significant policy update concerning Special Rupee Vostro Accounts (SRVAs) held by persons residing outside India. This update allows these account holders to diversify their investments beyond government securities.

Key Changes

  • Investment Expansion:
    • SRVA holders can now invest their surplus rupee balances in corporate debt instruments such as non-convertible debentures (NCDs), bonds, and commercial papers issued by Indian companies.
  • Objective:
    • This move aims to increase participation in the corporate bond market.
    • It is expected to make SRVAs more attractive by offering potentially higher returns.
  • Regulatory Considerations:
    • Investments in corporate debt via SRVAs will be counted under the General Route limit for foreign portfolio investors (FPIs).
    • Minimum residual maturity and issue-wise limits that typically apply to FPIs will not apply to these SRVA-based investments.

The SRVA mechanism, introduced in July 2022, facilitates international trade transactions in Indian rupees, and this update is positioned to further integrate foreign investments into India's financial markets.

  • Tags :
  • Special Rupee Vostro Accounts (SRVAs)
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