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RBI unveils measures to attract foreign capital; expands FAR, eases FPI norms and FCNR(B) support

· 5 min read·Source: Livemint
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Alongside its June 5, 2026 monetary policy, the Reserve Bank of India announced a set of measures to attract foreign capital and strengthen external-sector stability. It expanded the Fully Accessible Route (FAR) to include all new issuances of 15-year, 30-year and 40-year government securities during 2026, and made sovereign green bonds FAR-eligible. The RBI will bear the full hedging cost for banks mobilising 3-to-5-year FCNR(B) deposits until September 30, 2026, and offer a concessional forex swap facility for external commercial borrowings by PSUs. Separately, the government exempted Foreign Portfolio Investors (FPIs) from income tax on interest and capital gains from G-secs, effective April 1, 2026. Analysts estimate the package could draw up to about $5 billion in additional monthly inflows.

Key Facts & Details

8 points
  • 1
    FAR expanded to include all new 15-, 30- and 40-year G-sec issuances in 2026; sovereign green bonds made FAR-eligible.
  • 2
    RBI to bear full hedging cost on 3-5 year FCNR(B) deposits until September 30, 2026.
  • 3
    Concessional forex swap facility for ECBs by public sector firms until September 30, 2026.
  • 4
    Govt exempts FPIs from income tax on interest and capital gains from G-secs, effective April 1, 2026.
  • 5
    Measures could attract up to about $5 billion in additional monthly capital inflows, per analysts.

Deep Dive

  • +
    The package is aimed at supporting the rupee and bridging the balance-of-payments gap.
  • +
    The rupee appreciated after the measures were announced.
  • +
    These are distinct from the MPC's decision to hold the repo rate at 5.25%.
Q

Exam Focus

Which route did the RBI expand in June 2026 to deepen foreign participation in government securities?

Related Topics

RBIForeign CapitalFPIFAR

Exam Relevance & Angle

Capital-account and FPI/FCNR measures are high-value topics for RBI Grade B and banking exams and affect the rupee and bond markets directly.

Target Exams

SBI POIBPS PORBI Grade BRBI AssistantNABARD Grade ASSC CGLUPSC CSE

Background & Context

The Fully Accessible Route (FAR) lets non-residents invest without limit in specified government securities. FCNR(B) deposits are foreign-currency deposits by NRIs. FPIs are foreign portfolio investors in Indian markets.

Related GK Concepts

Must Know
Fully Accessible RouteFPIFCNR(B) depositsExternal commercial borrowingsSovereign green bonds

Test Yourself

1 / 2

In June 2026, the RBI expanded which route to include all new 15/30/40-year G-sec issuances?

Source

Livemint

This topic is important for:

SBI PO

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IBPS PO

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RBI Grade B

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RBI unveils measures to attract foreign capital; expands FAR, eases FPI norms and FCNR(B) support — Current Affairs 2026-06-06