Sebi Eases FPI Rules for G-Secs Investment

Sebi, India's markets regulator, has simplified rules for Foreign Portfolio Investors (FPIs) investing solely in Indian government securities. This change aims to attract more long-term bond investors by easing compliance, reducing KYC frequency, and facilitating investment. These measures align with India's growing debt market interest and major global bond index inclusions.

Sebi, the Indian markets regulator, announced a series of regulatory updates on Wednesday designed to simplify and reduce compliance requirements for Foreign Portfolio Investors (FPIs) investing exclusively in Indian government securities (G-Secs).

This initiative is intended to attract more long-term investors to India’s burgeoning debt market. It simplifies the complex scenario where foreign investors currently utilize three routes for investing in Indian debt: General, Voluntary Retention Route (VRR), and the Fully Accessible Route (FAR).

Changes include harmonizing the frequency of mandatory KYC reviews with RBI guidelines and allowing certain individuals like Non-resident Indians and Overseas Citizens to become constituents of GS-FPI without previous restrictions. These shifts come amid increased FPI investment in FAR-eligible bonds, reaching significant heights by March 2025.