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Informist, Wednesday, May 14, 2025

MUMBAI – The Securities and Exchange Board of India has proposed several measures to ease regulation on foreign portfolio investors investing solely in Indian government bonds through the voluntary retention route and the fully accessible route. The regulator's whole-time member Ananth Narayan G. had said in December that the SEBI was working to get rid of all its registration-related compliance that such FPIs must fulfil.

A SEBI consultation paper Tuesday proposed waiving requirements to disclose affiliations with investor groups and eliminating the investment limits for non-residents, overseas citizens of India, and resident Indian individuals' in an FPI. The review of Know-Your-Customer details for government bond investors by their custodians would also be relaxed to two, eight and 10 years, in line with Reserve Bank of India timelines, rather than the SEBI's one or three-year mandate, based on risk assessment, the paper said.

A foreign investor exclusively purchasing Indian government bonds would be categorised as an 'IGB-FPI' after making appropriate declarations, as per the proposed guidelines. A regular foreign investor could transition to an 'IGB-FPI' after divesting all other securities except those permitted under the newly-proposed category. An 'IGB-FPI' could also apply to become a regular FPI after necessary declarations, the paper said. 

Non-residents, overseas citizens or even residents may also control an 'IGB-FPI', according to the proposed norms. The requirements for residents to contribute through the Liberalised Remittance Scheme and in global funds whose Indian exposure is less than 50% shall continue to apply, the paper said.

The paper also proposed revising the period for FPIs' disclosure of material changes in information and submission of supporting documents to 30 days for all changes. The current disclosure period is seven working days and 30 days from the date of change for Type I and Type II changes. 

According to Clearing Corp. of India data at 1445 IST, FPIs owned government bonds worth INR 2.94 trillion through the fully accessible route and nearly INR 2 trillion through the voluntary retention route. SEBI said it aims for a risk-based approach with optimum regulation and ease of doing business to "encourage foreign investment into the country".  End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Cassandra Carvalho

Edited by Akul Nishant Akhoury

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