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Informist, Friday, Jun. 5, 2026

 

--RBI Malhotra: Expanding universe of FAR bonds 

--RBI Malhotra: To add all new issuances of 15, 30, 40 yr gilts in FAR 

 

MUMBAI – As the Centre and the Reserve Bank of India look to shore up foreign capital in the country, RBI Governor Sanjay Malhotra Friday said the central bank will include all new issuances of 15-, 30- and 40-year Indian government bonds under the Fully Accessible Route. In 2020, the central bank had introduced the Fully Accessible Route to allow non-resident investors to purchase specific Indian dated securities without restrictions. Limits on short-term investment, concentration and individual securities on foreign portfolio investors' purchases under the general route are in the process of being removed, Malhotra also said.

 

"These measures, along with the tax benefits provided by the government this morning, should help attract foreign capital for government borrowing," Malhotra said in his monetary policy statement. Friday, the Centre exempted foreign institutional investors from paying capital gains tax on investment in gilts, while also exempting these investors from paying withholding tax on interest of these bonds.

 

Currently, the Fully Accessible Route includes 50 bonds, with the highest maturity bond being the 7.37%, 2054 sovereign green bond. The newly issued 6.94%, 2036 gilt is also under this list. The current 15-year benchmark 6.68%, 2040 bond is not part of this list, neither is the 7.24%, 2055 gilt. The RBI later Friday added these two bonds, along with the 7.71%, 2066 bond, to the FAR list. Foreign portfolio investors have net sold gilts worth INR 65.72 billion through the fully accessible route, since the US and Iran exchanged strikes in the Gulf on Feb. 28, according to data from Clearing Corp. of India. This number does not reflect the hefty sales during the initial days of the conflict, as investors have bought gilts on recent reports of likely tax incentives from the Centre.  

 

FPIs currently have three channels of investment in Indian debt, namely; the general route, the voluntary retention route, and the Fully Accessible Route. Considering the three routes of investment, foreign portfolio investors pumped INR 161 billion into Indian debt in 2025-26 (Apr-Mar), as per the RBI's annual report released last week. As of Mar. 31, FPIs utilised 12.7% of their limit on holdings in Indian debt through the general route, down from 14.5% the previous year, as per the report.  End

 

Reported by Cassandra Carvalho

Edited by Deepshikha Bhardwaj

 

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