RBI Unveils Measures to Boost Foreign Inflows Amid Rupee Pressure

The Reserve Bank of India (RBI) announced a broad set of measures on June 5, 2026, to attract foreign capital and enhance dollar inflows. The policy package was introduced even as the central bank kept key interest rates unchanged.

The move comes against the backdrop of sustained pressure on the Indian rupee and evolving global uncertainties. It reflects coordinated efforts with the government to strengthen India’s external financial position.

Rupee Pressure and Policy Context

The Indian rupee has depreciated by over 6% in 2026, weighed down by multiple external factors. Rising crude oil prices and geopolitical tensions in West Asia have increased import costs and currency volatility.

Persistent foreign portfolio outflows have also contributed to downward pressure on the currency. In this context, the RBI’s measures aim to stabilise external balances and improve capital inflows.

Changes To Government Bond Investment Framework

The RBI has expanded the universe of securities available under the Fully Accessible Route (FAR). All new government bonds with maturities of 15 years, 30 years and 40 years will now be included in this route.

Additionally, restrictions relating to short-term investments, concentration limits, and individual security limits have been removed under the General Route for FPIs. These changes are expected to simplify investment access and enhance participation in India’s sovereign debt market.

Coordination With Government Tax Measures

The RBI’s announcement follows tax-related measures introduced by the government on the same day. Foreign investors have been exempted from capital gains tax and withholding tax on interest earned from government securities.

Together, these changes represent a coordinated policy effort to increase the attractiveness of Indian bonds. The objective is to support government borrowing while encouraging stable foreign inflows into debt markets.

Expanding Overseas Participation in Equity Markets

The RBI has also introduced measures to widen participation in Indian equity markets. Investment limits for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) in listed equities without SEBI registration have been increased.

The facility has now been extended to all individual Persons Resident Outside India (PROIs). This move is expected to broaden the base of overseas investors and facilitate greater retail participation in Indian equities.

Read More: RBI Removes FPI Concentration Limits to Boost Debt Market Inflows.

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Conclusion

The RBI’s latest measures reflect a multi-pronged approach to address external sector challenges. By easing investment norms and expanding access to government securities, the central bank aims to attract more foreign capital.

The coordinated steps with the government further strengthen the policy framework supporting inflows. These developments highlight ongoing efforts to maintain financial stability amid global and domestic uncertainties.

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