In a significant step towards deepening India’s debt market and expanding the use of the Indian Rupee in international trade, the Reserve Bank of India (RBI) has permitted persons resident outside India holding Special Rupee Vostro Accounts (SRVA) to invest their rupee surplus balances in corporate debt instruments issued by Indian companies.
This policy move, communicated via Circular No. 13 dated October 3, 2025, builds upon the RBI’s earlier provisions that allowed SRVA holders to invest in Central Government Securities (G-Secs) and Treasury Bills, thereby further liberalising and diversifying investment avenues under the SRVA framework.
Background
The SRVA mechanism, introduced in July 2022, enables international trade settlement in INR and is part of the RBI’s broader effort to promote the internationalisation of the Indian Rupee. Until recently, foreign entities with rupee balances in these accounts could invest only in central government instruments.
To enhance the attractiveness and utility of the SRVA route, the RBI has now allowed investments in:
- Non-convertible debentures (NCDs)
- Bonds
- Commercial Papers (CPs)
All must be issued by Indian companies and held in compliance with relevant FEMA and SEBI regulations.
Key Highlights of the Circular
- Expanded Definition of “Eligible Instruments”
The term “Government Securities” has been revised to “eligible instruments” across various sections of the Master Direction – Non-resident Investment in Debt Instruments (2025), to include the newly permitted instruments. - Revised Investment Limits and Conditions
Investments made in corporate debt by SRVA holders will count under the General Route investment limits for foreign portfolio investors (FPIs). However, some flexibility has been granted:
- No minimum residual maturity requirement
- No issue-wise limits, which are otherwise applicable to FPIs
- Demat and Reporting Requirements
- AD Category-I banks must facilitate separate demat accounts for SRVA holders to manage these investments.
- All transactions must be reported to SEBI-registered depositories for monitoring investment caps.
- Responsibility of Compliance
SRVA holders and the AD Category-I banks maintaining their accounts are jointly responsible for ensuring adherence to the applicable regulations, limits, and conditions.
Implications for Indian Markets
This move is a clear signal of RBI’s intent to:
- De-dollarise trade settlements by promoting the Indian Rupee as a stable, investable currency for global partners.
- Broaden the investor base for India’s corporate debt market, improving liquidity and potentially reducing borrowing costs for Indian corporates.
- Support exporters and trade partners by giving them productive investment options for their INR holdings in India.
What’s Next?
The directions are effective immediately, and AD Category-I banks are expected to inform their clients and constituents accordingly.
By widening the scope of investments under the SRVA framework, RBI is laying the groundwork for a more globally integrated, INR-based financial ecosystem—a strategic step in India’s evolving foreign exchange and capital account framework.