MONEY
SEBI relaxes norms for FPIs investing exclusively in government bonds
- IBJ Bureau
- May 14, 2025
The SEBI has proposed to simplify rules and ease regulatory compliance for FPIs that invest exclusively in Indian government bonds via the voluntary retention route (VRR) and fully-accessible route (FAR).
The move is aimed at attracting more long-term bond investors to India.
Currently, foreign investors can invest in Indian debt through three routes: general, VRR and FAR. VRR and FAR allow investments without many restrictions, such as security-wise or concentration limits.
In its consultation paper, the markets regulator has proposed easing registration and other compliance requirements for a new FPI category called Indian Government Bond-Foreign Portfolio Investors (IGB-FPIs) – investing exclusively in government bonds. The SEBI has suggested that IGB-FPIs will not need to provide investors’ group details, as bond investments under FAR and VRR do not have such limits.
Generally, FPIs are required to disclose group structures for investment cap monitoring. It has suggested that certain compliance requirements like investor’ group disclosure and investment caps will not apply to IGB-FPIs. The new category should invest only in IGBs via FAR and VRR.
Moreover, clubbing rules for group investments will not apply to IGB-FPIs.
Currently, NRIs, OCIs and resident Indians (RIs) cannot contribute more than 25 per cent individually or 50 per cent collectively to an FPI and cannot control it.
The regulator has suggested removing these restrictions for IGB-FPIs, allowing NRIs, OCIs and RIs to invest freely in IGB-FPIs and be in control of IGB-FPIs.
Report By
View Reporter News