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.
