RBI, govt steps lure FPIs to buy INR 45 bln of FAR gilts, most since Jun 30
This story was originally published at 23:16 IST on 5 June 2026
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--CCIL data shows FPI net gilt buy via FAR Fri, most since Jun 30
MUMBAI – Foreign portfolio investors net purchased gilts worth INR 44.93 billion through the Fully Accessible Route Friday, according to data from Clearing Corp. of India. This is the highest such single-day purchase through this route since Jun. 30. The purchases come on a day the Centre and Reserve Bank of India unveiled a barrage of measures to incentivise FPIs' investments in India, especially into sovereign bonds. Considering Friday's purchases, FPIs' total gilt holdings through this route rose to INR 3.29 trillion, the highest since Mar. 5.
The Centre Friday exempted foreign institutional investors from the 20% withholding tax they pay for interest earned on their investment in Indian gilts. The government also exempted FIIs from paying capital gains tax on these securities. The RBI Friday amended the regulatory framework with immediate effect, and added three existing on-the-run bonds to the list of gilts eligible under the Fully Accessible Route; namely the 6.68%, 2040; the 7.24%, 2055; and 7.71%, 2066 gilts. The central bank said it will add all new issuances of 15-, 30-, and 40-year gilts to the Fully Accessible Route. It will also add all new issuances of five-, seven-, 10-, 15-, 30-, and 40-year green bonds to the list, it said.
The central bank also removed limits on foreign portfolio investors' purchase of gilts under the General Route, while maintaining the overall cap of 6% of the outstanding stock of gilts under this channel for a given financial year. The governor Friday also announced short-term measures to shore up capital, such as a facility to boost external commercial borrowings by state-owned banks and concession on banks' hedging cost to raise fresh foreign-currency non-resident deposits.
Foreign portfolio investors had aggressively sold Indian assets in March after the outbreak of war in West Asia--which has been putting pressure on the rupee and eroding India's balance of payments. The slew of measures to draw capital inflows Friday is expected to attract $40 billion to $50 billion, according to market participants. End
US$1 = INR 94.9450
Reported by Cassandra Carvalho
Edited by Deepshikha Bhardwaj
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