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Rajnish
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Rajnish
Asked: September 28, 20202020-09-28T07:16:12+05:30 2020-09-28T07:16:12+05:30In: UPSC PRELIMS

What is Voluntary Retention Route (VRR)?

Describe Debt Voluntary Retention Route (VRR).

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    1. Rajveer Thakur

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      rajveer With Love
      2020-09-28T07:23:31+05:30Added an answer on September 28, 2020 at 7:23 am

      Voluntary Retention Route (VRR):

      • RBI introduced a separate channel, the ‘Voluntary Retention Route’ in 2019 to enable FPIs to invest in debt markets in India. 
      • Investments through VRR are free from macro-prudential and other regulatory prescriptions applicable to FPI investments in debt markets, provided FPIs voluntarily commit to retain a required minimum percentage of their investments in India for a particular period. The minimum retention period was kept at three years.
      • The Reserve Bank of India (RBI) permitted more time to foreign portfolio investors (FPIs) in adhering with the condition under the Voluntary Retention Route (VRR).

       

      Aim of VRR:

      • The VRR channel is aimed at attracting long-term and stable FPI investments into debt markets, while providing FPIs with operational flexibility to manage their investments.
      • VRR scheme tallows FPIs to participate in repos and also invest in exchange traded funds that invest in debt instruments.

       

      Eligibility of VRR:

      • Any entity registered as an FPI with SEBI is eligible to participate through this Route.

       

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