The central bank will soon issue a detailed circular on how the mechanism will be operational.
Governor Sanjay Malhotra did not specify the amount that the central bank expects from these measures but said that it expects inflows to be “healthy”.
“We are not targeting any particular amount, but we do expect healthy flows, both you know from ECB and other various measures have been around today. So as a result of all these measures, we expect healthy flows… in this period of three to four months,” Malhotra said.
He added that besides the measure on PSUs’ ECB borrowings, the government’s announcements like allowing longer tenure government bonds to be part of the fully accessible route for foreign funds and removing caps on short-term foreign investment in bonds and concentration limits and buying of individual bonds will help attract inflows.
Malhotra said all these measures will ensure much better foreign inflows than what they would have been otherwise. So far in calendar year 2026, foreign portfolio investors have pulled out $27.2 billion from the Indian markets, much higher than the $11.8 billion which was pulled out in the whole of 2025.
Malhotra said the facility is only open to PSUs because the benefits are passed on to the general public from these entities more widely.
“Public sector entities are a special category. They are more in areas where we feel the needs of the economy are more. And the benefits are passed on to the general public because they are catering to public utilities and infrastructure.”