‘Voluntary Retention Route’ (VRR) for Foreign Portfolio Investors (FPIs) investment in debt

February 10, 2022

To
All Authorized Persons

Madam / Sir

Please refer to paragraph 3 of the Statement on Developmental and Regulatory Policies dated February 10, 2022 regarding enhancement of the investment limit under the Voluntary Retention Route (VRR).

1. 2. Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to the following regulations, as amended from time to time, and the relevant Directions issued under these regulations.
   1. a. Foreign Exchange Management (Permissible Capital Accounts Transactions) Regulations, 2000 notified vide Notification No. FEMA 1/2000-RB dated May 03, 2000;
   2. b. Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 notified vide Notification No. FEMA 3(R)/2018-RB dated December 17, 2018;
   3. c. Foreign Exchange Management (Debt Instruments) Regulations, 2019 notified vide Notification No. FEMA. 396/2019-RB dated October 17, 2019; and
   4. d. Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 notified vide Notification No. FEMA 25/RB – 2000 dated May 03, 2000.

3. AD Category – I banks may also refer to A.P. (DIR Series) Circular No. 34 dated May 24, 2019, on ‘Voluntary Retention Route’ for Foreign Portfolio Investors investment in debt, read with A.P. (DIR Series) Circular No. 19 dated January 23, 2020.

4. The investment limit under the VRR is increased to ₹2,50,000 crore from ₹1,50,000 crore. The updated Directions are as given in the Annex.

5. These Directions shall be applicable with effect from April 1, 2022.

6. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/ approvals, if any, required under any other law.

Yours faithfully

(Dimple Bhandia)
Chief General Manager

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