The Securities & Exchange Board of India (Sebi) on Tuesday proposed to ease rules for foreign portfolio investors (FPIs) that exclusively invest in government bonds (“IGBs”) under the voluntary retention route (VRR) and fully accessible route (FAR).
As per Sebi data, the aggregate holding of FPIs in FAR-eligible government bonds stood at around ₹3 trillion as of March 2025.
“It is proposed to align the periodicity of KYC review for IGB-FPIs with the timelines prescribed by the RBI for their regulated entities, to facilitate the ease of doing business,” a consultation paper from the regulator said.
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Sebi has also proposed that these entities should not be required to publish investor group details. “Simplification of the onboarding process and rationalisation of ongoing regulatory compliances is expected to further help in facilitating investments by foreign portfolio investors (FPIs) in Indian government bonds,” Sebi said.
The timeline for intimation of material information by these entities has also been proposed to relax to 30 days.
The regulator noted that this has been done as several global index providers announced the inclusion of IGBs in their respective bond indices. They include JPMorgan Global EM Bond Index (starting June 2024), Bloomberg EM Local Currency Government Index (starting January 2025) and FTSE Russell Emerging Markets Government Bond Index (starting September 2025).
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Sebi has also proposed allowing resident as well as non-resident Indians and overseas citizens to contribute to the corpus of foreign investors who exclusively purchase government bonds.
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