RBI notifies the revised Voluntary Retention Route for Investments by Foreign Portfolio Investors (FPIs) and opens allotment ‘on tap’

Reserve Bank of India introduced the Voluntary Retention Route for Investments by Foreign Portfolio Investors (FPIs) on March 01, 2019. Limits for investment in debt by Foreign Portfolio Investors (FPIs) were offered for allotment ‘on tap’ during March 11 – April 30, 2019. Based on the feedback received, and in consultation with the Government, the Bank has made certain changes in the scheme to increase its operational flexibility. The revised scheme has been notified today, vide, A.P. (DIR Series) Circular No. 34 dated May 24, 2019.

The revised VRR scheme shall be open for allotment from May 27, 2019, as per the following details:-

  1. The investment limit shall be ? 54,606.55 crores, under the VRR–Combined category, which allows investment in both government securities and corporate debt.

  2. The minimum retention period shall be three years. During this period, FPIs shall maintain a minimum of 75% of the allocated amount in India.

  3. Investment limits shall be available ‘on tap’ and allotted on ‘first come, first served’ basis.

  4. The ‘tap’ shall be kept open till the limit is fully allotted or till December 31, 2019, whichever is earlier.

  5. FPIs may apply for investment limits online to Clearing Corporation of India Ltd. (CCIL) through their respective custodians.

  6. CCIL will separately notify the operational details of application and allotment.

  7. FPIs that were allotted investment limits under the tap that was open during March 11-April 30, 2019, may, at their discretion, opt to convert their full allotment to ‘VRR-Combined’ by advising CCIL through their custodians. Such conversions shall not use up the investment limit of ? 54,606.55 crores indicated in para (a) above.

Sr. no




Original scheme


Revised scheme




Categories for debt investment


·VRR-Corp – Investment in Corporate Debt

·VRR-Govt – Investment in Government Securities


Additional category introduced i.e.

VRR-Combined – Investment in instruments eligible under both VRR-Govt and VRR-Corp




Investment Limits


·INR 40,000 crore for VRR-Govt; and

·INR 35,000 crore for VRR-Corp


The overall limit of INR 75,000 crore or higher, as may be decided by RBI

·INR 54,606 crore limit for VRR Combined




Availability of investment limits


Till the limits are exhausted or till 30 April 2019, whichever is earlier


Till the limit is fully allotted or till 31 December 2019, whichever is earlier




Time Limit for investment


·Invest 25% of the amount allocated within one month; and

·remaining amount within three months from the date of allotment.


·Invest 75% of the amount allocated within three months




Exiting from VRR at the end of the retention period


·Liquidate its portfolio and exit,

·Shift investments to the General Investment Limit, subject to availability of limits.


The Additional option of holding investments until the date of maturity or date of sale, whichever is earlier




Exiting from VRR prior to the end of retention period


·Selling investments to another FPI(s) (such FPI shall abide by all terms and conditions applicable to the selling FPI)


·Option of PART exit by sale to another FPI(s) has been provided

Source: RBI, Dhruva Advisors

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