Balance of Payments (BOP)

📊 High-Yield Data & Statistical Fact Sheet

Cue Words	Notes
BOP Sustainability Ceiling	Current Account Deficit (CAD) safety benchmark is 2.5% to 3.0% of GDP. **FY26 actuals**: CAD contained at **~1.0% of GDP** (Apr-Dec 2025), widening to **$25.2 Billion** for the full year amid FPI outflows (~$16.4B) and reserve drawdown; analysts flag a possible widening to **1.7-2.0%** ahead on higher oil prices/global trade pressures. **Forex reserves**: Peaked at **$728.49 Billion (Feb 2026)**, easing to **~$690.69 Billion (May 2026)** as RBI sold **$100 Billion+** in spot/forward markets during FY26 to defend the Rupee — still comfortably above adequacy norms.
Current Account Convertibility	Full Convertibility (since 1994, Art VIII IMF).
Capital Account Convertibility	Partial Convertibility.
FDI Threshold	Holding ≥ 10% equity in a listed company or any equity in an unlisted firm.
FPI Threshold	Holding < 10% equity in a listed company.
External Debt-to-GDP Ratio	Stable at ~20% of GDP.
External Debt Primary Component	External Commercial Borrowings (ECBs) constitute the largest share.
External Debt Currency Composition	US Dollar-denominated debt largest (~54%), followed by Indian Rupee (~31%).
IMF SDR Basket (5 Currencies)	USD, EUR, RMB (Chinese Renminbi), JPY, GBP.

🌍 Economic Survey 2025-26 — External Sector Highlights

2026

• India remains the world's largest recipient of remittances — inflows reaching USD 135.4 billion in FY25.
• Foreign exchange reserves increased to USD 701.4 billion as of 16 January 2026, providing cover for 11 months of imports and 94% of external debt.
• India remains the largest recipient of gross FDI inflows in South Asia, surpassing Indonesia and Vietnam (per UNCTAD).
• India is the largest destination for greenfield digital investments between 2020-24, attracting USD 114 billion.

1. THE ARCHITECTURE OF CURRENT & CAPITAL ACCOUNTS

Cue Words	Notes
FDI Prohibited Sectors	Atomic Energy, Railway Operations, Gambling/Casinos, Lotteries, Chit Funds, Nidhi Companies, Tobacco manufacturing.
FCNR(B) Account	Maintained in foreign currency; interest earned is completely tax-free in India.
NRE Account	Maintained in Indian Rupees; fully repatriable and interest earned is tax-free.
NRO Account	Maintained in Indian Rupees for domestic earnings (rent, pension); interest earned is subject to tax.

2. EXCHANGE RATE METRICS & CENTRAL BANK INTERVENTION

Cue Words	Notes
NEER (Nominal Effective Exchange Rate)	Weighted average of bilateral exchange rates.
REER (Real Effective Exchange Rate)	NEER adjusted for inflation differentials. REER > 100 denotes overvaluation.
Managed Float System	India follows a Managed Float (Dirty Float) exchange rate system where RBI intervenes via spot/forward transactions to curb excessive volatility without targeting a specific exchange rate level.
Rupee at 91 — Depreciation Drivers (2025)	Rupee fell ~4.3% against USD in CY2025 — worst-performing Asian currency vs Yuan/Rupiah, though better than structurally weak Yen/Won. Twin shocks: US 50% tariff on India (record $41.7bn trade deficit in Oct) + spike in gold prices (gold import bill $14.72bn in Oct) causing a "dollar drain". FPIs pulling out of equities + domestic investors shifting to bullion added rupee-selling pressure. RBI shifted from active dollar-selling to lighter intervention (managed-float approach); net ~$50bn forex sold Nov-2025 to smoothen slide; reserves remained comfortable at ~$693bn.
RBI Currency Swaps & OMO (2025)	Feb 2025: RBI conducted a $10 billion dollar/rupee buy-sell swap auction to infuse long-term rupee liquidity (2019 precedent: $5bn 3-year swap). RBI announced OMO purchases of G-secs worth ₹1,00,000 crore + a 3-year $5bn USD/INR buy-sell swap to inject durable liquidity (not to prop up the rupee, per RBI clarification).

3. BOP STRUCTURE, TWIN DEFICITS & REMITTANCES

Cue Words	Notes
BOP Account Structure	**Current Account**: Trade in goods/services, income, and transfers. **Capital Account**: Changes in assets/liabilities (loans, investments). **Errors & Omissions**: Balancing/reconciliation item.
Twin Deficit Hypothesis	Theory linking a country's fiscal deficit and current account deficit — a rising fiscal deficit tends to widen the CAD via higher import demand and interest-rate-driven capital inflows.
J-Curve Effect	After currency depreciation, the trade balance initially worsens (existing contracts priced in old terms) before improving as export volumes respond — plotted, this traces a "J" shape over time.
Remittances & Liberalised Remittance Scheme (LRS)	**Inward remittances**: India is the world's largest recipient of remittances from its diaspora — **$135.4 Billion in FY25**; crossed the **$100 Billion mark for the first time as an annual figure of $110.47 Billion in FY26 workers' remittances** (+26% YoY from $87.55B), per RBI/Economic Survey data. Top source countries: USA (~28%), UAE (~19%), UK (~11%). **LRS**: Allows resident individuals to remit up to **USD 2,50,000 per financial year** for permitted current/capital account transactions. **RBI Remittances Survey (2023-24)**: Remittances of $118.7 billion financed over half of India's merchandise trade deficit; Advanced Economies (US, UK, Canada, Australia, Singapore) now contribute 51.2%, overtaking GCC's 37.9%. Transfers above ₹5 lakh form 29% of remittance value from just 1.4% of transactions — dominance of high-earning diaspora. Maharashtra, Kerala, Tamil Nadu receive 51% of remittances; Bihar, UP, Rajasthan get under 6%.
Foreign Exchange Reserves Composition	Comprises Foreign Currency Assets (largest share), Gold, SDRs, and India's Reserve Tranche Position with the IMF.
Net FDI Collapse & FPI Withdrawal (2025)	India received $81bn gross FDI but net FDI was only $353 million — gap driven by rising Outward FDI (OFDI), often routed via low-tax hubs (Singapore, Mauritius, UAE ~40%+ combined). Gross FDI-to-GDP ratio declined from 3.1% (2020-21) to near zero; Manufacturing's FDI share fell to 12%, replaced by financial/services sectors. FPIs withdrew ₹23,885 crore from Indian equities in 2025 (3 straight months of outflows) on tariff uncertainty and weak earnings; India's share of EM portfolio funds fell to 21% (2024) as allocations rotate toward China (28.8%). Total foreign investment (FDI+FPI) as % of GDP hit a 25-year low in FY25.

4. THE 1991 CRISIS: IMF CONDITIONALITIES & CURRENCY TERMINOLOGY

Cue Words	Notes
IMF Conditions on India (1991 BoP Crisis)	Rupee devalued by 22% (in two consecutive fortnights, falling from ₹21 to ₹27/USD) under the Extended Fund Facility (EFF, first signed by India in FY1981-82, drawn again in 1991). Customs peak duty slashed from 130% to 30%; excise duty raised by 20% to neutralise the revenue loss from the customs cut. Government expenditure (salaries, pensions, subsidies) mandated to be cut by 10% per annum.
Hard vs Soft Currency	**Hard Currency**: Internationally trusted, highly liquid currency backed by a diversified, high-demand export base (e.g., USD, Euro, Yen, Pound). **Soft Currency**: Currency easily available in domestic forex markets — opposite of hard currency (e.g., the Rupee in India's own forex market).
Hot / Heated Currency	**Hot Currency**: A hard currency exiting an economy rapidly (e.g., USD during the 1997 SE Asian Crisis). **Heated Currency**: The domestic currency under depreciation pressure due to a hard currency's rapid exit — also called "currency under hammering."
Cheap vs Dear Currency (Keynesian terms)	**Cheap Currency/Money**: Government repurchasing its bonds before maturity (at full price), injecting money into the economy — associated with a lower/softer interest rate regime. **Dear Currency/Money**: Government issuing bonds, drawing money from the public — associated with a higher/costlier interest rate regime.

5. FULLY ACCESSIBLE ROUTE, INTERNATIONALISATION OF THE RUPEE & THE LIQUIDITY TRAP

Cue Words	Notes
Fully Accessible Route (FAR), March 2020	RBI move toward capital account convertibility: removed the investment ceiling/cap on non-resident (foreign) investment in specified categories of Government Securities, letting non-residents invest without limit in those securities — a step-stone, not full capital account convertibility.
Internationalisation of the Rupee — Sequencing & Preconditions	Sequencing: current-account transactions first → capital-account transactions between residents and NRIs → use of rupee in transactions between two non-residents (the final stage of a truly international currency). Preconditions restricted to only the largest economies: size of economy/dominant share of global GDP, globally dominant businesses, extraordinary military capability — meaning rupee internationalisation "cannot be achieved by financial regulation alone." Privileges of an international/reserve currency: immunity from BoP crises (can pay external deficits in own currency), dominance of home financial institutions/markets globally, added bargaining power for domestic business, currency-risk protection for domestic firms, seigniorage, and reduced need to hold forex reserves.
Liquidity Trap — Monetary Policy's Lower Bound	Nominal deposit rate = Inflation + Real interest rate. In a slowdown, the Central Bank cuts the repo rate to push money supply/demand; if demand still doesn't respond, it keeps cutting until repo, deposit, and lending rates all approach the zero lower bound, beyond which further cuts are not possible. At this point, monetary policy alone cannot revive the economy — investors hold cash (demand deposits) rather than lock into low-yield fixed deposits, expecting future rate increases; fiscal policy must then take over to stimulate demand. Near-zero domestic rates in this state can also fuel carry-trade-driven capital outflows relevant to India's capital account.

6. GLOSSARY: SPECULATIVE CAPITAL FLOWS

Cue Words	Notes
Hot Money	Currency that moves quickly and repeatedly between financial markets/countries chasing higher short-term interest rates — shifts from low-rate to high-rate economies, affecting exchange rates and the BoP.
Round Tripping (of FDI)	Domestic money routed out to a foreign jurisdiction (e.g., Mauritius) and back into the home country as "foreign" direct investment — exploits favourable tax treaties or launders black money by disguising its Indian origin.

7. FUNDAMENTALS CHECK — BOP BASIC STRUCTURE & CAD

Cue Words	Notes
BOP Balancing Identity	**Current Account + Capital Account + Errors & Omissions = 0** (by accounting construction, BOP always balances; a "BOP deficit/surplus" colloquially refers to a Current Account deficit/surplus not financed/offset by Capital Account flows, forcing reserve drawdown/accretion).
Current Account — Components	**Trade in goods** (visible/merchandise exports-imports), **trade in services** (invisibles — IT, tourism, transport), **income** (investment income, compensation of employees), and **current transfers** (remittances, gifts, grants) — net of all four = Current Account Balance.
Capital Account — Components	**FDI**, **FPI**, external commercial borrowings/loans, banking capital (NRI deposits), and other capital transactions (asset transfers) — represents changes in a country's external assets and liabilities.
Current Account Deficit (CAD) — Definition	Arises when a country's imports of goods, services, and transfers exceed its exports of the same — i.e., Current Account Balance is negative; financed by drawing down forex reserves or via Capital Account inflows (FDI/FPI/borrowing).
Balance of Trade (BoT) vs Balance of Payments (BoP)	**Balance of Trade**: Narrower — only the **goods (visible/merchandise)** export-import difference. **Balance of Payments**: Broader — records **all** economic transactions (goods, services, income, transfers, capital flows) between residents and the rest of the world. BoT is one sub-component feeding into the Current Account of the BoP.

8. BOP CLASSIFICATION: DEBT vs NON-DEBT LIABILITIES & TWIN DEFICIT

Cue Words	Notes
Current Account — Nature	Current Account records short-term transactions.
Non-Debt Liabilities (Capital Account)	**FDI**, **FPI** (through FIIs), **ADRs/GDRs** — create no repayment obligation.
Debt Liabilities (Capital Account)	**Loans** — ECBs, trade credit, external assistance, short-term external debt; and **Banking Capital** — NRI Deposits.
India's Capital Account — Historical Position	India's Capital Account has always remained POSITIVE (India being a destination for investment) — even before the 1991 reforms, though FPI and ECBs were themselves introduced only in the 1991 reforms.
Twin Deficit — Definition	When a nation has both a Current Account Deficit and a Budget (fiscal) Deficit — i.e., importing more than exporting plus spending more than generating. In the long run this devalues the nation's currency.
Debt Service Ratio	Ratio of debt service payments (principal + interest) to export earnings.
Net International Investment Position (NIIP)	Gap between a nation's stock of foreign assets and foreigners' stock of that nation's assets at a point in time, i.e. external assets − external liabilities. Higher net FDI inflows ⇒ worse (more negative) absolute NIIP level, since foreign ownership of domestic assets rises.
J-Curve — Mechanism Detail	The trade deficit initially worsens after depreciation because the higher rupee price of imports outweighs the initially reduced volume of imports; later export levels rise sharply and domestic consumers buy fewer imported products due to their higher prices.
Impossible Trinity (The Trilemma)	It is impossible to have all three simultaneously — fixed exchange rate, free capital flows, and independent monetary policy. Only two policy positions are possible; e.g. adopting a fixed exchange rate + free capital flows means loss of monetary sovereignty.
Tobin Tax / Robinhood Tax	Tax on the international flow of short-term capital, to discourage volatile short-term inflows or "hot money" (highly speculative). The shorter the transaction period, the heavier the tax burden.

9. EXTERNAL DEBT: PROFILE, STATISTICS & REPORTING

Cue Words	Notes
India's External Debt — Older Snapshot	**$550 Billion ≈ 20% of GDP**; **Sovereign Debt = $100 Billion = 3.7% of GDP**. *(Older figure; the ~20% of GDP ratio remains the benchmark in the fact sheet above, but the absolute stock is dated.)* **Currency denomination of bonds**: US Dollar (53%), Rupee (31%), Yen (5%), SDR (4%), Euro (3%). *(Older figure; superseded by the fact sheet's USD ~54% / INR ~31% composition.)* **Share by component**: Commercial Borrowings (40%) > Non-resident deposits (23%) > Debt from Multilateral agencies. *(Older figures; the fact sheet notes ECBs remain the largest share.)*
Quarterly External Debt Statistics (QEDS)	Online debt database launched by World Bank + IMF, covering countries that subscribe to the IMF's Special Data Dissemination Standards and selected countries participating in the IMF's General Data Dissemination System. Purpose: facilitate macro-economic analysis and cross-country data comparison. The External Debt Management Unit (EDMU) in the Ministry of Finance has joined QEDS and supplies India's external debt data quarterly.
External Commercial Borrowings (ECBs)	Can be raised in rupees, dollars, or any other freely convertible foreign currency. RBI has eased ECB norms to address liquidity conditions in the economy; mandatory hedging coverage reduced from 100% to 70%.

10. OFFSHORE RUPEE BONDS & DEPOSITORY RECEIPTS

Cue Words	Notes
Masala Bonds	**Rupee-denominated offshore bonds** — funds raised from the overseas market. **Currency risk lies with the foreign investor**, since conversion happens at the **market rate on the date of settlement** (NOT a pre-decided exchange rate). RBI mandates: any Indian bank or corporate is eligible to issue; money raised **cannot be used for real estate** (except development of a township or affordable housing); **cannot be used for investing in capital markets** (e.g. purchase of land — not allowed). **Minimum maturity**: up to $50 Mn — **3 years**; above $50 Mn — **5 years**. Can be issued **only in a country that is a FATF member** and whose securities market regulator is a member of **IOSCO**. **Kerala** became the first state to issue Masala Bonds — to rebuild after the 2019 floods.
Maharaja Bond	**Rupee-denominated onshore bond**.
Depository Receipts (DRs)	Financial instrument (security) issued by a company in a **foreign jurisdiction**; a negotiable security tradeable on a stock exchange, letting issuers raise funds outside their own country. **IDR (Indian Depository Receipt)**: Rupee-denominated — enables **foreign companies** (not Indian companies) to raise funds from the Indian securities market. **ADR/GDR**: Dollar-denominated — allows an **Indian company** to raise funds from foreign security markets. ADR = American Depository Receipt (issued in the US on the basis of an Indian company's securities); GDR = Global Depository Receipt.
Elephant Bond	**25-year sovereign bond** proposed to bring back black money stashed outside India — a person gets **immunity from prosecution** if they invest **40% of undisclosed money** in the bond and pay **15% tax**. Money to be used **exclusively to fund the infrastructure sector**. Recommended by the **Surjit Bhalla Committee on Trade and Policy**.

11. NRI DEPOSIT ACCOUNTS (FEMA) & THE LIBERALISED REMITTANCE SCHEME

Cue Words	Notes
FCNR(B) — Foreign Currency (Non-Resident) Account (Banks)	**Only foreign currency permitted**; **only time deposits** (NOT demand deposits). Can be opened by **NRIs, PIOs, OCBs** (overseas corporate bodies). **Term: 1–5 years**. **Repatriation of funds permitted**.
NRE — Non-Resident (External) Rupee Account Scheme	Can be opened by NRIs, PIOs, OCBs with banks authorised by RBI. Repatriation permitted.
NRO — Non-Resident Ordinary Rupee Account Scheme	Can be opened by any person resident outside India (including Pakistani and Bangladeshi nationals) with an authorised bank. When a resident becomes an NRI, his existing rupee accounts automatically become NRO accounts. NRO balances are remittable up to $1 Million per financial year.
NRI Deposits & External Debt Treatment	**FCNR(B) and NRE accounts**: repatriation allowed ⇒ their deposits are **included in external debt outstanding**. **NRO**: principal is non-repatriable, but **only current income** (rent, interest, pension) is repatriable ⇒ **also included** in India's external debt outstanding.
LRS — Scope & Regulation	By **RBI**: allows residents to remit a certain amount during a financial year to another country for investment and expenditure. Allows **all residents (including minors)** to freely remit up to **$250,000 per financial year (April–March)** for any permissible current or capital account transaction. **Only for individuals, not companies**. Regulated under **FEMA**. **NOT available to** corporates, partnership firms, HUFs, Trusts etc.
LRS — Permitted Purposes	Private visit to any country (except Nepal and Bhutan), gift or donation, going abroad for employment, emigration, maintenance of relatives, medical treatment expenses, studies abroad, etc.
LRS — Prohibited Uses & TCS	**NOT available for**: lottery tickets, proscribed magazines; items restricted under **Schedule 1 and 2 of FEMA Rules, 2000**; trading in forex abroad; capital account remittances to FATF **"non-cooperative countries"**. **Tax Collected at Source (TCS)** applies for: remittance **> ₹7 Lakh** in a financial year, and sale of an **overseas tour package** through a tour operator.

12. NEER / REER MECHANICS, PPP & REAL EXCHANGE RATE

Cue Words	Notes
Effective Exchange Rate — Concept	An index expressing the strength of a currency relative to a group of other currencies.
NEER — Detail	**Multilateral rate** — weighted average of bilateral exchange rates of the rupee against a basket of foreign currencies, **weighted according to trade with each country**. **NEER index increases ⇒ appreciation of the rupee ⇒ India's export competitiveness decreases**.
REER — Detail & Direction	Weighted average of NEERs **adjusted for inflation** — captures inflation differentials between India and its major trading partners. REER appreciating (e.g. 100 → 150) behaves like rupee appreciation (₹75/$ → ₹60/$) ⇒ **export competitiveness of Indian goods falls**; exports become more expensive and imports cheaper ⇒ **loss of trade competitiveness**. Therefore **LOW REER ⇒ exports rise**. It behaves like the normal rupee-dollar exchange rate. **Base = 100 (base year 2015)**. The difference between REER and NEER arises from India's **domestic inflation relative to its 36 major trading partner countries**.
Real Exchange Rate (RER)	Quantity of domestic goods required to buy one unit of a given basket of foreign goods. When the Nominal Exchange Rate = PPP exchange rate ⇒ RER = 1 — the two countries are at Purchasing Power Parity ⇒ no trade.
Purchasing Power Parity (PPP) — Estimation	Estimated by the World Bank's International Comparison Programme (ICP). Indian nodal agency: MoSPI.
Interest Rates & Exchange Rate — Misc Fundae	If the interest rate (interest on government bonds) is higher ⇒ international investment banks/funds/MNCs buy more bonds ⇒ demand for the currency rises ⇒ currency appreciates. But with a higher interest rate, domestically people borrow less from banks ⇒ lower consumer spending.

13. FOREIGN EXCHANGE & CURRENCY SWAPS

Cue Words	Notes
Foreign Exchange Swap (RBI)	**RBI buys dollars from banks**; banks buy the dollars back at the end of the swap period. Purpose: to **improve domestic liquidity conditions**. Done by RBI after the **IL&FS breakdown**-induced liquidity crunch.
Currency Swap Agreement — Mechanics	Two parties exchange **principal and interest of a loan in one currency for principal and interest in another currency** — used to obtain foreign currency loans at a better interest rate. **Worked example (at $1 = ₹70)**: In the US a US company borrows at 6% while an Indian company operating in the US pays 8%; in India an Indian company borrows at 9% while a US company operating in India pays 11%. So the US company raises $1 billion at 6% and passes it to the Indian company working in the US, while the Indian company raises ₹70 billion at 9% and passes it to the US company working in India. The Indian company keeps paying 6% and returns the $1 billion at term end; the US company keeps paying 9% and returns the ₹70 billion at term end.
Usha Thorat Committee (Offshore Rupee Markets)	Terms of reference: examine issues related to offshore rupee markets and recommend policy measures to ensure the stability of the external value of the domestic currency; examine the role International Financial Services Centres can play in addressing these concerns; and develop deep and liquid on-shore financial markets that act as a price setter of the Rupee globally.

14. FDI: DEFINITION, ROUTES, SECTORAL CAPS & SOURCES

Cue Words	Notes
What Counts as FDI	Investment through capital instruments by a person resident outside India: any investment in an unlisted company is FDI (FDI is done through primary markets), or investment in >10% of post-paid-up capital of a listed company. Once an investment is classified as FDI, if the holding later falls below 10% it is still classified as FDI.
FDI Regulation	Regulated by the FEMA Act, and also by RBI & DPIIT. FDI rules are made by DPIIT.
FDI Sources & Destinations (2018-19)	**Singapore ($14.6bn) > Mauritius ($6.5bn) > USA ($2.8bn) > Japan ($2.7bn)**. *(Older figures; superseded by the FY25 gross/net FDI data in Section 3.)* **Maharashtra** received the highest FDI among states.
100% Automatic Route Sectors	Insurance Intermediaries; Coal and mining-associated infrastructure; Marketplace model of e-commerce (FDI in e-commerce under MoCommerce & Industry); Renewable energy projects; Food processing industries; Development & production of seeds; Plantation sector; Air transport; Railway infrastructure (not operations).
Other Sectoral Caps	**Defence manufacturing — 74% under automatic route**; **Insurance — 74%**.
FDI Prohibited Sectors (source list)	Lottery; Chit Funds & Nidhi companies; trading in **Transferable Development Rights (TDR)**; Real estate business; construction of farmhouses; tobacco. **No private investment in Atomic Energy & Railways** (operations).
FDI in Retail & E-Commerce	**Marketplace model** (e.g. Amazon) ⇒ **100% FDI under automatic route**. **Inventory model** (e.g. Grofers) ⇒ **No FDI permitted**. **100% FDI in all models of retail** for food products **sourced from Indian farmers or processed in India**.
FDI vs FPI/FII — Eight-Point Comparison	**1. Instrument**: FDI is only in equity/shares/ownership; FPI is in **both equity and debt (loans)**. **2. Market**: FDI through the **primary market**; FPI generally through the **secondary market** (can also be primary). **3. Capital flow**: FDI — new shares are generally issued and **new capital reaches the company**, which invests in factories/machines; FPI — generally **only owners change hands**, no new capital reaches the company. **4. Control**: FDI investors purchase large shareholdings, appoint the Board of Directors and take part in decision-making (**active management**); FPI investors buy small shareholdings and stay out of management. **5. Motive**: FDI investors seek to make the company profitable and target **company profit**; FPI investors target the **share price** and gain from price appreciation. **6. Focus**: FDI is **sector-specific** (e.g. a US steel company invests only in an Indian steel company); FPI is in the **general capital market**, indifferent to company/sector. **7. Horizon**: FDI is **long-term**; FPI is generally **short-term**. **8. Lock-in**: Governments generally specify a **lock-in period** for FDI making it quite stable; FPI has **no lock-in**, the investor can exit any time — **making the currency volatile**.

15. FPI ROUTES, PARTICIPATORY NOTES & OFFSHORE FUNDS

Cue Words	Notes
FPI — Definition	Investment through capital instruments by a person resident outside India in <10% of the capital of a listed company.
Qualified Foreign Investor (QFI)	A sub-category of FPI — any foreign individual, group, or resident from a country that is a FATF member and a signatory to IOSCO's Multilateral Memorandum of Understanding (MMoU).
Voluntary Retention Route (VRR)	A separate channel enabling investors (including FPIs) to invest in Indian debt markets under easier rules in return for a longer commitment period. Investments are free of regulatory norms applicable to FPI investments, provided FPIs voluntarily commit to retain a minimum % of their investments for at least 3 years. Investment cap through VRR doubled to ₹1.5 lakh crore. Allows participation in Repo transactions & ETFs (NOT P-Notes).
Fully Accessible Route (FAR) — FPI angle	Enables non-resident investors to invest in specified G-secs with no FPI limit (other G-secs carry a 6% limit). Domestic investors can also use this route.
Medium-Term Framework (FPI Debt Limits)	FPI limit on G-secs = 6%, SDLs (State Development Loans) = 2%, Corporate bonds = 9% of total outstanding securities.
Participatory Notes (P-Notes)	Popular among foreign investors for accessing the Indian securities market because of: restrictions on foreign investments; exposure to local shares without the time and cost of investing directly; customised tools to manage risks; use as an important hedging tool; and as a safe and lucrative route to invest unaccounted/illegal money.
Broad-Based Funds	A fund established outside India in which no single individual holds more than 49% of shares.