New FPI route will appeal to long-term debt investors, says experts

Investments will be over and above existing limits set for govt, corporate bonds

The proposed new route for foreign portfolio investor (FPI) debt investments will be appeal to long-term investors and give regulatory authorities a better handle on flows, said experts.

The voluntary retention route (VRR) proposed by the Reserve Bank of India (RBI) on Friday does away with regulatory restrictions, that are otherwise applicable, provided FPIs commit to lock-in two-thirds of their investment for a minimum three years. 

Investments under the new route will be over and above the existing FPI limits set for government and corporate bonds. 

Market participants said the VRR route’s biggest draw is the regulatory leeway it provides.