TaxTMI 
TaxTMI 
‘Voluntary Retention Route’ (VRR) for Foreign Portfolio Investors (FPIs) investment in debt
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....ted May 03, 2000; b. Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 notified vide Notification No. FEMA 3(R)/2018-RB dated December 17, 2018; c. Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017 notified vide Notification No. FEMA.20(R)/2017-RB dated November 07, 2017; and d. Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 notified vide Notification No. FEMA 25/RB - 2000 dated May 03, 2000. 2. A reference is also invited to the discussion paper on 'Voluntary Retention Route' (VRR) for investments by Foreign Portfolio Investors (FPIs) re....
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....ons 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 (T. Rabi Sankar) Chief General Manager Annex 'Voluntary Retention Route' (VRR) for Foreign Portfolio Investors (FPIs) investment Introduction The Reserve Bank, in consultation with the Government of India and Securities and Exchange Board of India (SEBI), introduces a separate channel, called the 'Voluntary Retention Route' (VRR), to enable FPIs to invest in debt markets in India. Broadly, investments through the Route will be free of the macro-prudential and other regulatory norms applicable to FPI investments in deb....
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....ing as defined in Section 45U (d) of RBI Act, 1934; and for the purpose of this regulation excludes reverse repo conducted under the Liquidity Adjustment Facility and the Marginal Standing Facility. viii. 'VRR-Corp' shall mean Voluntary Retention Route for FPI investment in Corporate Debt Instruments. ix. 'VRR-Govt' shall mean Voluntary Retention Route for FPI investment in Government Securities. 3. Eligible investors Any FPI registered with SEBI is eligible to participate through this Route. Participation through this Route shall be voluntary. 4. Eligible instruments a. Under VRR-Govt, FPIs will be eligible to invest in any Government Securities i.e., Central Government dated Securities (G-Secs), Treasur....
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.... f. FPIs shall invest the amount allocated, called the Committed Portfolio Size (CPS) in the relevant debt instruments and remain invested at all times during the voluntary retention period, subject to the following relaxations: i. The minimum investment of an FPI during the retention period shall be 75% of the CPS (The flexibility for modulating investments between 75%-100% of CPS is intended to enable FPIs to adjust their portfolio size as per their investment philosophy). ii. The required investment amount shall be adhered to on an end-of-day basis. For this purpose, investment shall include cash holdings in the Rupee accounts used for this Route. g. Amounts of investment shall be reckoned ....
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..... Custodians shall report all non-minor violations as well as minor violations that have not been regularised to SEBI. 7. Other relaxations a. Investments made through the Route shall not be subject to any minimum residual maturity requirement, concentration limit or single/group investor-wise limits applicable to corporate bonds as specified in paragraphs 4(b), (e) and (f) respectively of A.P. (DIR Series) Circular No. 31 dated June 15, 2018. b. Income from investments through the Route may be reinvested at the discretion of the FPI. Such investments will be permitted even in excess of the CPS. 8. Access to other facilities a. FPIs investing through the Route will be elig....
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.... as under: a. An FPI shall bid two variables - the amount it proposes to invest and the retention period of that investment, which shall not be less than the minimum retention period applicable for that auction. b. FPIs are permitted to place multiple bids. c. The criterion for allocation under each auction shall be the retention period bid in the auction. d. Bids will be accepted in descending order of retention period, the highest first, until the amounts of accepted bids add up to the auction amount. e. Allotment at margin (i.e., at the lowest retention period accepted), in case the amount bid at margin is more than the amount available for allotment, shall be as below: i. The marginal bid shall be all....