The Reserve Bank on Friday allowed persons residing outside the country to invest in corporate debt securities through Special Rupee Vostro Accounts.
Earlier, such entities were only permitted to invest their rupee surplus balance in accounts in central government securities, including treasury bills.
"It has now been decided to also permit investment of these balances in non-convertible debentures/bonds and commercial papers issued by an Indian company," the RBI said.
Special Rupee Vostro Accounts (SRVAs) are dedicated accounts to deepen settlement of trade in Indian rupees.
The investments will be subject to the investment limit and stipulations specified for FPI (foreign portfolio investors) investments under the general route, and there will also be other conditions, the central bank said.
The change in rules to allow the investments in corporate debt is applicable with immediate effect, it added.
Meanwhile, the Reserve Bank has also announced the draft on rationalising regulations pertaining to external commercial borrowing (ECB) included in the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018.
The draft has features like linking the borrowing limits to a borrower's financial strength and proposing raising ECBs at market-determined interest rates.
The end-use restrictions and Minimum Average Maturity requirements are also proposed to be simplified, it said.
The borrower and lender base eligible for ECB transactions is proposed to be expanded to enhance opportunities of credit flow, and the reporting requirements are being simplified to ease compliance obligations, the central bank added.
The move was announced on October 1 after the policy review, and the public feedback on the draft has to be given by October 24.