RBI raises overseas equity limits to 10% in 2026

What the RBI changed on June 5

The Reserve Bank of India (RBI) on June 5 eased equity investment norms for non-resident Indians (NRIs), Overseas Citizens of India (OCIs), and other overseas individuals. The central bank raised the limits under a registration-free route that allows investment in listed equity instruments without registering with the Securities and Exchange Board of India (Sebi). It also extended the same facility to all individual Persons Resident Outside India (PROIs), putting them on par with NRIs and OCIs. Market participants said the step could broaden the investor base for Indian equities and improve liquidity. The RBI’s move comes at a time when overseas institutional investors have been net sellers, according to the report.

Registration-free equity route extended to PROIs

The RBI said the limits for investment by NRIs and OCIs in equity instruments traded on the stock market without Sebi registration are being increased. It added that the same facility is being extended to all individual PROIs at par with NRIs and OCIs. The report also describes this as expanding the scope of a registration-free route that earlier applied only to NRIs and OCIs. With this change, the compliance and onboarding burden for individual overseas investors is expected to reduce relative to an FPI registration process. The underlying objective, as described in official statements cited in the report, is to widen participation and support inflows.

Finance ministry opens PIS route to all overseas individuals

Separately, the Ministry of Finance said individual PROIs would be permitted to invest in listed Indian companies through the Portfolio Investment Scheme (PIS). The report notes that this route was previously available only to NRIs and OCIs. The ministry said the revised framework would facilitate greater mobilisation of foreign portfolio capital by leveraging existing onboarding systems for NRI and OCI investors. It also said simplified onboarding and reduced compliance requirements would enhance ease of doing business while attracting a broader base of relatively stable individual foreign investors. The ministry linked the change to supporting “greater and more stable foreign inflows” into Indian equity markets.

What changed in the investment caps

Under the revised framework, the investment limit for a single overseas individual investor has been doubled to 10% of a company’s paid-up capital from 5% earlier. The aggregate limit has been raised to 24% from 10%. These limits apply to investment in listed companies under the relevant portfolio route described in the report. The change increases the headroom for individual overseas investors to build positions without moving into the Sebi-registered FPI framework, subject to the stated caps. The report frames this as a structural expansion of access rather than a one-off relaxation.

A broader package to manage external sector pressures

The equity norm changes were part of a wider June 5 package described as supporting the rupee and managing external sector pressures. The report says measures included expanding the fully accessible route (FAR) to cover all new 15-year, 30-year, and 40-year government securities, removing investment concentration limits, and easing equity investment norms for non-residents. It also lists the introduction of concessional forex swaps, full hedging cost support for dealer banks raising FCNR(B) deposits, and restoration of export realisation timelines to nine months after global volatility and weakness in emerging market currencies intensified. The measures were described as aiming to attract foreign capital, deepen domestic markets, and improve foreign exchange liquidity. The report also says the RBI clarified that market chatter on exchange risk covers for foreign borrowing by PSUs was not part of the June 5 measures.

Government securities: FAR expansion and fewer constraints

The RBI widened the scope of the FAR to deepen the sovereign bond market and attract long-term capital. As per PTI quoted in the report, RBI Governor Sanjay Malhotra said that for government securities under FAR, the universe of “specified securities” is being expanded by including all new issuances of 15-year, 30-year, and 40-year tenor G-secs. Earlier, only securities up to a 10-year tenor were eligible, according to the report. The central bank also removed investment concentration limits under this route. The report adds that limits pertaining to short-term investment, concentration and individual securities on FPI investment under the General Route are being removed.

Tax change cited alongside bond-market measures

The report says these bond-market measures, along with tax benefits provided by the government, should help attract foreign capital for government borrowing. It also states that the government has scrapped long-term capital gains tax on investments made by foreign institutional investors (FIIs) in government securities through an Ordinance issued on Friday. The combined set of steps is described as supporting foreign participation in the sovereign debt market and facilitating government borrowing at affordable interest rates. The report links the policy direction to attracting stable foreign capital flows and strengthening India’s balance of payments amid heightened global volatility.

Key changes at a glance

Implementation and legal changes

The changes will be implemented through amendments to the Foreign Exchange Management (Non-Debt Instruments) Rules, 2026, according to the report. This indicates that the updated limits and access framework will be anchored in the FEMA rules that govern non-debt capital flows. For market participants, the timeline and operational details will depend on the notified amendments and implementation mechanics through banking and brokerage channels used for overseas onboarding. The finance ministry’s statement emphasised using existing onboarding systems for NRI and OCI investors, suggesting continuity in how accounts and compliance checks are handled, while expanding the eligible investor base.

Why the move matters for equity market structure

The most direct effect is a higher ceiling for individual overseas investors to take positions in listed companies without moving into a Sebi registration process. Market participants cited in the report said it could broaden the investor base and improve liquidity, and it could support foreign capital inflows. The ministry’s framing focuses on stable individual foreign investors and simplified compliance. At the same time, the report places the equity changes within a wider effort to attract foreign capital and improve foreign exchange liquidity. The final impact will be shaped by how investors use the expanded limits and how quickly the amended rules and operational processes take effect.

Conclusion

The RBI’s June 5 decision doubles the single-investor cap to 10% and raises the aggregate cap to 24% for eligible overseas individuals investing in listed equities without Sebi registration, while also extending access to all individual PROIs. In parallel, the finance ministry has opened the PIS route to these investors, and the RBI has expanded FAR eligibility for new long-tenor government securities. The next step, as stated in the report, is implementation through amendments to the Foreign Exchange Management (Non-Debt Instruments) Rules, 2026.