In order to encourage the Foreign Portfolio Investors (FPIs) to undertake long-term investments in Indian debt markets RBI has introduced a separate scheme called ‘Voluntary Retention Route’ (VRR). Under VRR, Foreign Portfolio Investors will get more operational flexibility in terms of instrument choices besides exemptions from certain regulatory requirements. Under VRR the investments will be free of the macro-prudential and other regulatory norms applicable to FPI investments in debt markets, provided FPIs voluntarily commit to retain a required minimum percentage of their investments in India for a period. Participation through this Route will be entirely voluntary.
RBI list down following details and highlights that the investment under VVR scheme will open for allotment from March 11, 2019.
- The aggregate investment limit shall be ₹ 40,000 crores for VRR-Govt and ₹ 35,000 crores for VRR-Corp.
- The minimum retention period shall be three years. During this period, FPIs shall maintain a minimum of 75% of the allocated amount in India.
- Investment limits shall be available on tap for investments and shall be allotted by Clearing Corporation of India Ltd. (CCIL) on ‘first come first served’ basis.
- The investment limits under the current tranche shall be kept open till the limits are exhausted or till April 30, 2019 whichever is earlier.
- FPIs desirous of investing may apply online to CCIL through their respective custodians.
- CCIL will separately notify the operational details of application and allotment.
VVR scheme was finalised after the feedback from the public and in consultation with Government of India vide, A.P (DIR Series) Circular No. 21 dated March 1, 2019.