What is VRR? VVR stands for Voluntary Retention Route. The Reserve Bank of India introduced VRR in March 2019 as a separate channel for FPIs to invest in Indian debt markets when the Indian rupee was depreciating against the US dollar. The Reserve Bank of India (RBI) established the Voluntary Retention Route (VRR) to allow foreign portfolio investors (FPIs) to invest in India's debt markets. All investments made through this channel are exempt from the macroprudential and other regulatory requirements that apply to FPI debt investments. FPIs, on the other hand, must voluntarily commit to retaining a required minimum percentage of their investments in India for a specified period. In 2019, the limit from Rs. 1,50,000 crores to Rs. 2,50,000 crores. What is the aim of VRR? The Voluntary Retention Route (VRR) main's goal is to attract long-term and stable FPI investments in India's debt markets while providing FPIs with operational flexibility to manage their investments. Who are eligible under VRR? Any entity registered with SEBI as an FPI may invest through this channel. When was VRR first used? The Reserve Bank of India introduced VRR in March 2019 as a separate channel for FPIs to invest in Indian debt markets when the Indian rupee was depreciating against the US dollar. How does VRR benefit investors? Investor investments made through VRR are exempt from macroprudential and other regulatory requirements. These only apply to FPI investments in India's debt markets. However, the central bank has set a time limit of three years. The current minimum period for this investment is three years, or as determined by the Reserve Bank of India for each auction. What is the maximum amount that FPIs can invest through VRR? The VRR investment limit for FPIs has been raised to INR 2,50,000 crore from INR 1,50,000 crore previously. Investments made through this channel will be distributed on a first-come, first-served basis. Thank you.
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