TaxTMI 
TaxTMI 
‘Voluntary Retention Route’ (VRR) for Foreign Portfolio Investors (FPIs) investment in debt
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....RB dated 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. AD Category - I banks may refer to A.P.(DIR Series) Circular No. 21 dated March 01, 2019 on 'Voluntary Retention Route' (VRR) for Foreign Po....
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.... 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 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. The features of the Route are explained below in detail. 2. Definitions • 'Committed Portfolio Size' (CPS), for an FPI, shall mean the amount allotted to that FPI. • 'General Investment Limit', for any one of the three categories, viz., Central Government Securities, State Dev....
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....-Combined' shall mean Voluntary Retention Route for FPI investment in instruments eligible under both VRR-Govt and VRR-Corp. 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 • Under VRR-Govt, FPIs will be eligible to invest in any Government Securities i.e., Central Government dated Securities (G-Secs), Treasury Bills (T-bills) as well as State Development Loans (SDLs). Under VRR-Corp, FPIs may invest in any instrument listed under Schedule 5 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017 notified vide Notification No. FEMA.20(....
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....ntion 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). • 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 in terms of the face value of securities. 6. Management of portfolio • Successful allottees shall invest at least 75% of their CPS within three months from the date of allotment. The retention period will commence from the date of allotment of limit. • Prior to the end of the committe....
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....its 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. • 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 • FPIs investing through the Route will be eligible to participate in repos for their cash management, provided that the amount borrowed or lent under repo shall not exceed 10% of their investment under VRR. • FPIs investing under this route shall be eligible to use any currency or interest rate derivative instrument, OTC or exchange traded, to manage their interest rate ....