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RBI increased Investment Limits Under Voluntary Retention Route (VRR) to Rs 1.5lakh crore

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On January 24, 2020, based on the feedback received from the Voluntary Retention Route (VRR) scheme introduced by the Reserve Bank of India(RBI) in 2009, the central bank(RBI) in consultation with the govt. made certain amendments in the scheme to increase its operational flexibility. As per the amendmentsThe investment limit under VRR has now been increased to Rs 1,50,000 crores (1.5lakh crores) from the earlier Rs 75,000 croresRBI Voluntary Retention RouteVoluntary Retention Route:

The revised VRR scheme was made open for allotment from January 24, 2020 onwards. The revision made are as follows:

i.Investment limit:  For fresh allotment, the investment limit will be Rs. 90,630 crores and will be allotted under VRR- combined category.

  • The limits of investment will also be available ‘on tap’ and allotted on ‘first come, first served’ basis.
  • Until the limits are fully allotted, the tap will remain opened.

ii.Retention period: The minimum period of retention will be 3 years.

iii.FPI investment: Foreign Portfolio Investors(FPI) may apply for the investment limits through their respective custodians to Clearing Corporation of India Ltd. (CCIL).

VRR rule extensions:

i.Short-term investments by an FPI in govt securities & treasury bills can now be up to 30% of total investment from the previous 20%.

ii.Short-term investment limit by an FPI into corporate bonds has also been raised to 30% of total investment of an investor from 20%.

iii.FPI investments in debt instruments issued by asset reconstruction companies(ARC) will be exempt from the short term limits under the corporate insolvency resolution process as per the resolution plan approved by the National Company Law Tribunal(NCLT) under the Insolvency and Bankruptcy Code(IBC).

VRR formation:

i.VRR was formed on March 01, 2019 for investments by FPI. Initially Rs.75,000 crores were offered for investment in 2 tranches with Rs 54,300 crores already been invested as on December 31, 2019.

ii.The scheme is aimed at drawing in foreign investors willing to keep money in India for a minimum period of time.

About Reserve Bank of India(RBI):
Governor- Shaktikanta Das.
Headquarters- Mumbai, Maharashtra.
Founded- 1 April 1935, Kolkata.
Act- Reserve Bank of India Act,1934.
Deputy Governors– 4 (BP Kanungo, N S Vishwanathan, Mahesh Kumar Jain, Michael Debabrata Patra).