Sebi has proposed to considerably illuminate compliance standards for foreign portfolio bullets who invest exclusively in Indian government bonds under the voluntary retention route and a fully accessible route. | Photocredit:
The Securities and Exchange Board of India (SEBI) has proposed to relax the legal requirements for foreign investors who invest exclusively in Indian government bonds under the voluntary retention route (VRR) and fully accessible route (FAR).
These foreign portfolio investors (FPIs) are proposed to be excluded from various FPI regulations for the convenience of business, risk-based approach and optimum regulations. “Simplifying the onboarding process and the rationalization of current regulatory compliance is expected to help further facilitate investments by FPIs in Indian government bonds (IGBs),” said Sebi in a concept of paper, who invite public comments before June 3.
These proposals come into the light of the total part of the FPIs in well -eligible government bonds that rise to £ 3.06 Lakh Crore from March 2025 from £ 1.74 Lakh Crore a year ago. The total investment limits assigned under VRR are at £ 2.05 Lakh Crore from March 2025, from £ 1.75 Lakh Crore a year ago. Recording in the JPMorgan Global Bond Index and Bloomberg Emerging Market Bond Index so far and in the FTSE Russell Emerging Markets Government from September – it is expected to deliver more intake.
Compliance relaxations
IGB-FPIS will be identified at the time of registration, but existing FPIs can also choose to switch by explaining and diverting all companies, in addition to making them permitted among the IGBs and their demat and trade accounts for other investments. A reverse transition to regular FPI is also possible by making appropriate disclosures.
The regulator of the capital markets has proposed to release IGB-FPIs from the provision of details of investor groups. Publication period lines for material changes are proposed to relax to 30 days from the current 7 days only for IGB-FPIs.
The periodicity of knowledge of the knowledge (KYC) for such FPIs is also presented as tailored to those prescribed by the reserve Bank of India (RBI). The central bank requires KYC updates once every 2, 8 or 10 years on the basis of the risk category of the investor, while Sebi mandatory an annual or three -year assessment.
Sebi has also proposed to allow non-resident Indians (NRIs), overseas citizens of India (OCIS) and Resident Indian persons (RIS) to invest in the corpus of IgBS-FPI without any limitation, except for some on RIS. Currently, NRI/OCI/Ri -contributions are limited to 25 percent per investor and 50 percent aggregated for each.
Published on May 13, 2025
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