Mumbai, May 8 -- The Reserve Bank of India (RBI) on Thursday allowed foreign investors greater freedom to buy Indian corporate bonds, giving them a chance to purchase more short-term paper.

The central bank removed short-term investment and concentration limits from its rules governing foreign investments in corporate bonds. This, it said, will provide greater ease of investment to foreign portfolio investors (FPIs).

Before the removal of restrictions, FPI investments in corporate debt with residual maturity up to one year could not exceed 30% of the total investment in corporate bonds. Similarly, the concentration limit meant that corporate bond investments by foreign investors were limited to 15% of the limit for these bonds for long-...