The RBI kept the policy repo rate at 5.25% with a neutral stance on 5 June 2026 and announced a package of measures prioritising rupee stabilisation over an immediate rate hike.
Key Policy Measures
- Repo rate & stance: Policy rate unchanged at 5.25% (MPC meeting 5 June 2026); neutral stance emphasising FX stability.
- FAR expansion: Fully Accessible Route expanded on 5 June 2026 to include new 15-, 30- and 40-year government securities without investment caps.
- Concessional FX swaps for ECBs: RBI offered concessional forex swap facility for PSUs to encourage External Commercial Borrowings until 30 Sept 2026.
- FCNR(B) support: US dollar-rupee swap facility operational from 10 June 2026 for fresh FCNR(B) deposits (3–5 year); RBI committed to bear FX hedging costs for authorised banks until 30 Sept 2026.
- Tax incentive: Government exempted interest income and capital gains of foreign institutional investors on government securities retrospectively from 1 April 2026.
Market and FX Metrics
- Rupee movement: Rupee fell near 97.00/USD in May 2026 and showed relative stability by 12 June 2026 after interventions.
- Reserves: Foreign exchange reserves around USD689 billion (June 2026).
- Net-short forward book: RBI’s net-short dollar position from forward selling estimated at USD110–115 billion (early June 2026).
- Estimated inflows: Analysts project the package could attract USD40–50 billion in foreign inflows.
Operational & Reporting Changes
- FEMA amendment (13 June 2026): Non-resident individuals may maintain designated repatriable rupee accounts for investments in listed Indian companies.
- Individual Foreign Investor (IFI): New reporting category from 13 June 2026 for authorised dealer banks to report overseas individuals’ equity purchases and transfers.
IASPOINT Booster Facts
- FAR: Part of FPI access route to government securities enabling foreign portfolio inflows without prescribed limits.
- Forward dollar selling: Central bank net-short forward book reflects forward sales to curb spot rupee depreciation.