RBI raises investment limits for NRIs in Indian equities

RBI raises investment limits for NRIs in Indian equities

The Reserve Bank of India (RBI) has raised the investment limits for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) in equity instruments on stock exchanges.

The revised policy seeks to simplify the process of investing in Indian equities for Indians living abroad.

Under the new guidelines, individual NRIs and OCIs can be proposed to invest up to 10% of a listed Indian company's paid-up equity capital through the Portfolio Investment Scheme (PIS).

Broader strategy to improve capital market participation

The RBI's decision also applies to all individual Persons Resident Outside India (PROIs), leveling the playing field for such investments.

This move is part of a broader strategy by the central bank to make investing easier and improve capital market participation.

The final guidelines on the revised investment limits and implementation framework will be released separately by the RBI.

Proposed changes to individual and aggregate investment limits

Currently, an individual NRI or OCI can invest up to 5% of the paid-up equity capital of a listed Indian company through PIS. The total investment by all such investors is capped at 10%.

However, the RBI has proposed to raise these limits significantly: individual investments would be allowed up to 10%, while aggregate investments could go as high as 24%.

Potential impact on capital flows from Indian diaspora

India's remittances are among the highest in the world. According to RBI data, inward remittances have exceeded $100 billion annually in recent years.

This highlights the Indian diaspora's crucial role as a contributor to capital and financial flows into India.

The revised investment limits by the RBI will further boost this trend, allowing more NRIs and OCIs to invest in Indian equities.