RBI opens direct equity investment route for all foreign individuals
Synopsis
The RBI has quietly dismantled one of the last structural barriers keeping non-NRI foreign individuals out of Indian listed equities. By allowing all Persons Resident Outside India to invest directly through dedicated repatriable rupee accounts — and creating a new IFI reporting category — the central bank has opened a door that was previously open only to the diaspora.
Key Takeaways
The RBI notified the new framework on 13 June 2025 ; it took effect immediately.
All Persons Resident Outside India (PROIs) — not just NRIs and OCIs — may now invest in equity instruments of listed Indian companies under Schedule III.
Authorised dealer (AD) banks can open dedicated repatriable rupee accounts for these investors, to be used exclusively for this investment route.
Sale proceeds may be repatriated abroad or retained in the designated account after payment of applicable taxes.
A new Individual Foreign Investor (IFI) reporting category has been introduced for AD banks to track overseas individual equity transactions.
RBI Governor Sanjay Malhotra had signalled the move at the MPC meeting earlier in June, alongside a concessional forex swap for ECBs and FCNR (B) deposit incentives until 30 September 2026 .
The Reserve Bank of India (RBI) has cleared a significant expansion of India's foreign investment framework, allowing all individuals residing outside India to invest directly in equity instruments of listed Indian companies — a move that extends market access well beyond the earlier universe of Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs). The central bank's notification, dated 13 June, was uploaded to its website on Monday, 15 June, and the new rules took effect immediately.
What the New Framework Allows
Under the revised rules, authorised dealer (AD) banks are now permitted to open repatriable rupee accounts for overseas individual investors seeking exposure to listed Indian equities. These accounts will function as dedicated channels — used exclusively for transactions under this investment route, including purchases, sales, and related transfers.
Overseas investors may fund their purchases through inward remittances or through funds held in existing repatriable deposit accounts. Proceeds from the sale of equity holdings may either be repatriated abroad or retained in the designated rupee account, subject to the payment of applicable taxes.
The Regulatory Trigger
The new framework follows amendments to the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, after the government revised those regulations. The updated Schedule III of the rules now explicitly permits all Persons Resident Outside India (PROIs) to invest in listed Indian equities on par with NRIs and OCIs — a parity that did not exist before.
This comes amid a broader push by the RBI to deepen foreign participation in Indian capital markets. RBI Governor Sanjay Malhotra, speaking after the Monetary Policy Committee (MPC) meeting earlier this month, had flagged the intent: limits for NRI and OCI investment in exchange-traded equity instruments without Securities and Exchange Board of India (SEBI) registration are being raised, and the same facility is being extended to all individual PROIs at par.
New Reporting Category: Individual Foreign Investor
In a parallel measure, the RBI has introduced a new classification — Individual Foreign Investor (IFI) — under which AD banks will report all purchases and transfers of equity instruments by overseas individuals, including NRIs and OCIs. The dedicated reporting category is designed to improve regulatory visibility over what has historically been a fragmented and harder-to-track segment of foreign portfolio flows.
Market participants have welcomed the move, describing it as a structural simplification that gives foreign individuals a clear, compliant banking pathway for equity investments — something that was previously unavailable outside the NRI/OCI bracket.
Broader Package of Measures
The equity investment liberalisation is part of a wider set of announcements from the MPC meeting. Governor Malhotra also outlined a concessional forex swap facility available until 30 September 2026 to incentivise External Commercial Borrowings (ECBs) by public sector undertakings. Separately, AD banks will be eligible for a facility covering the full hedging cost on fresh 3–5-year FCNR (B) deposits raised until the same date.
What This Means for Indian Markets
The opening of a direct equity route for all foreign individuals — not just the diaspora — is a meaningful widening of India's capital account. It removes a structural barrier that had long confined non-NRI foreign retail investors to the more complex Foreign Portfolio Investor (FPI) registration route via SEBI. Analysts say the change could draw incremental flows from high-net-worth individuals in markets such as the US, UK, Singapore, and the Gulf, where Indian equity interest has grown alongside India's rising global economic profile.
Regulatory clarity on repatriation and dedicated account structures is expected to reduce compliance friction for first-time foreign individual investors. The IFI reporting framework will also give regulators a cleaner data trail to monitor aggregate exposure and flag concentration risks.
Point of View
Direct retail equity access was effectively a diaspora privilege — non-NRI foreigners wanting Indian equities had to navigate the SEBI FPI registration maze. The new route removes that friction and signals that India is serious about broadening its foreign investor base beyond institutions and the diaspora. The IFI reporting category is the smart regulatory complement: more openness paired with better surveillance. The real question is uptake — whether high-net-worth foreign individuals will find the repatriable account structure simple enough in practice, or whether compliance ambiguity at the bank level blunts the policy intent.
NationPress
31 Jul 2026
Frequently Asked Questions
What has the RBI changed for foreign individual investors in Indian equities?
The RBI has allowed all individuals residing outside India — not just NRIs and OCIs — to invest directly in equity instruments of listed Indian companies. They can do so through inward remittances or repatriable deposit accounts, via a dedicated repatriable rupee account opened with an authorised dealer bank. The rules came into effect on 13 June 2025.
Who qualifies as an eligible investor under the new RBI framework?
Any Person Resident Outside India (PROI) — including but not limited to NRIs and OCIs — is now eligible. This extends the investment right to all foreign individuals, regardless of Indian origin or citizenship, on par with the diaspora.
What is the Individual Foreign Investor (IFI) category introduced by the RBI?
The IFI is a new reporting classification under which authorised dealer banks must report all purchases and transfers of listed Indian equity instruments made by overseas individuals, including NRIs and OCIs. It gives regulators a consolidated data trail for this segment of foreign flows.
Can foreign individual investors repatriate their money after selling Indian stocks?
Yes. Proceeds from the sale of equity investments may be repatriated abroad or retained in the designated repatriable rupee account, after payment of applicable taxes in India.
How does this change relate to the RBI Governor's MPC announcement?
RBI Governor Sanjay Malhotra had signalled the change at the Monetary Policy Committee meeting earlier in June, noting that investment limits for NRIs and OCIs in exchange-traded equities without SEBI registration were being raised and that the same facility would be extended to all PROIs. The 13 June notification formalised and operationalised that commitment.
