BT Explainer: RBI's big NRI investment move — Who benefits and what's changing?

The Reserve Bank of India (RBI) has announced a significant easing of investment rules for overseas investors, raising the limits for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) to invest in Indian equities without requiring registration with the Securities and Exchange Board of India (SEBI). The central bank has also proposed extending the same benefit to all individual Persons Resident Outside India (PROIs), a move that could broaden overseas participation in India's stock markets.

The announcement is part of a wider set of measures unveiled by the RBI to attract foreign capital and strengthen India's financial markets.

What has changed?

At present, NRIs and OCIs can invest in Indian equities through specific routes that do not require them to register as Foreign Portfolio Investors (FPIs) with SEBI. This process is relatively simple compared to the regulatory requirements applicable to most other overseas investors.

The RBI has now decided to increase the investment limits available under this registration-free framework. This means NRIs and OCIs will be able to hold larger investments in listed Indian companies without having to undergo a formal SEBI registration process.

The move builds on changes announced in Budget 2026, under which the individual investment ceiling for NRIs in a listed company was doubled to 10% from 5%. The aggregate investment limit for NRIs was also increased to 24%.

In addition, the RBI said the same registration-free facility will now be extended to all individual Persons Resident Outside India (PROIs), bringing them on par with NRIs and OCIs.

Who benefits?

The biggest beneficiaries are NRIs and OCIs looking to invest directly in Indian equities. Higher limits mean they can build larger portfolios and increase exposure to Indian companies without facing additional regulatory requirements.

The change could also benefit individual foreign residents who are not of Indian origin. Earlier, many such investors had to register as FPIs or invest through more complex structures to access Indian markets. Extending the simplified route to individual PROIs lowers entry barriers and could encourage greater retail participation from overseas investors.

For Indian markets, the move has the potential to increase liquidity, diversify the investor base and attract long-term foreign capital.

Why is RBI doing this now?

The decision comes amid a broader effort by policymakers to strengthen foreign capital inflows at a time when global investment flows remain volatile.

Adhil Shetty, CEO of BankBazaar, told Business Today that the announcement should be viewed as part of a wider capital mobilisation strategy.

"The increase in investment limits for NRIs and OCIs should be viewed as part of a larger capital mobilisation strategy rather than a standalone market access measure. The RBI announced it alongside a series of steps designed to attract foreign capital through government securities, FCNR deposits and external commercial borrowings, suggesting a coordinated effort to strengthen India's external funding channels," Shetty said.

"At a time when global liquidity conditions are becoming more uncertain, policymakers are increasingly focused on broadening and diversifying sources of capital. Overseas Indians have historically been an important and relatively stable source of foreign inflows, particularly during periods of global volatility. By expanding participation opportunities for this investor segment, the RBI is reinforcing a broader objective of deepening domestic financial markets and strengthening India's ability to attract long-term overseas capital," he added.

Larger foreign capital push

The relaxation for NRI and overseas investors was announced alongside several other measures aimed at attracting foreign funds. The RBI expanded the universe of government securities available under the Fully Accessible Route (FAR), removed certain investment restrictions for foreign investors, and introduced temporary incentives for external commercial borrowings (ECBs) and FCNR(B) deposits.

Debopam Chaudhuri, Chief Economist at Piramal Group, said the RBI's decision to expand investment access for overseas investors and widen participation in longer-tenor government securities under the FAR route is a constructive step that could support foreign capital inflows and strengthen the rupee.

He added that attracting a broader pool of foreign investors could help diversify funding sources and mitigate potential crowding-out effects on private corporate borrowers if government borrowing requirements increase amid the current geopolitical environment.

Anil Bamboli, Head–Fixed Income at HDFC Asset Management Company, said the RBI's measures to broaden foreign investor access, including the expansion of the FAR framework, should enhance the attractiveness of Indian government securities and support capital inflows, thereby helping ease pressure on the rupee.

He noted that while foreign portfolio investor outflows have largely been concentrated in equities, India's debt market continued to attract modest inflows in May. Bamboli added that the FAR expansion complements other RBI initiatives, including incentives for foreign currency deposits and overseas borrowings, aimed at strengthening the country's external funding position.

Taken together, the measures signal a coordinated push by policymakers to make India a more attractive destination for global capital while giving overseas investors easier access to the country's growth opportunities.