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The Voluntary Retention Route for Foreign Portfolio Investors
The Voluntary Retention Route for Foreign Portfolio Investors
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The Voluntary Retention Route for Foreign Portfolio Investors

30/05/2019

The Voluntary Retention Route (VRR) provides Foreign Portfolio Investors (FPIs) with a new channel of investment, and in broad terms, investments through this route will not be subject to macro-prudential and other regulatory norms which are applicable to FPI investments in debt markets through the existing general investment route. 

Unlike with the general investment route, FPIs under the VRR must voluntarily commit to retain a required minimum percentage of their investments in India for a defined period of time. Participation through VRR is entirely voluntary.

Following its announcement in the Fourth Bi-Monthly Monetary policy statement dated 05 October 2018, the Reserve Bank of India (RBI) on 05 October 2018 after consultation with the Government of India and the Securities and Exchange Board of India (SEBI), had released a discussion paper on Voluntary Retention Route (VRR) for investment by FPIs in Indian debt securities.

Comments on the discussion paper were invited from market participants by 19 October 2018.

After considering the comments and views provided by various stakeholders, the RBI on 01 March 2019 issued a Press Release and Circular finalising a separate scheme called the ‘VRR’ for investment by FPIs in Indian debt markets.

Eligible investors for VRR:  Any FPI registered with SEBI can participate in the VRR.

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