As per the earlier rules, investments by Foreign Portfolio Investors (FPI) in NCDs/bonds were required to be made in securities with a minimum residual maturity of three years.
"On a review, it has been decided to permit FPI to acquire NCDs/bonds, which are under default, either fully or partly, in the repayment of principal on maturity or principal installment in the case of amortising bond," RBI said in a notification.
The revised maturity period of such NCDs/bonds, restructured based on negotiations with the issuing Indian company, should be three years or more, it added.
The proposed move is expected to provide relief into the country's distressed debt market.
Further, RBI said that the FPI which propose to acquire such NCDs/bonds under default should disclose to the Debenture Trustees the terms of their offer to the existing debenture holders/beneficial owners from whom they are acquiring.
Such investment should be within the overall limit prescribed for corporate debt from time to time, which is at Rs 2.44 lakh crore currently.


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