Net Inflows into Fully Accessible Route (FAR) Securities
- February 2025 saw a total of ₹4,530 crore net inflow so far.
- During January 2025, there was a net inflow of ₹14,430 crore.
- Fresh inflows of ₹9,000 crore on January 31 came right after Bloomberg’s inclusion of India in the Emerging Market Local Currency Government Index.
What is FAR?
- The Fully Accessible Route (FAR) is a framework that permits non residents to invest in certain Indian government securities without restriction on the quantum of the investment.
- It was brought into force by the RBI in March 2020 to enhance foreign presence in the bond market in India.
- Most of the securities designated FAR are eligible for JP Morgan’s Government Bond Index Emerging Markets (GBI-EM-GD).
What is the Structure of FAR?
- RBI designates eligible government securities (G secs) for FAR investments.
- No investment ceilings on eligible investors unlike other routes where ceilings exist.
- Every new issue of 5 year, 10 year, and 30 year G secs will automatically be designated as FAR securities.
Reasons That Prompted FAR in the First Place?
- To improve foreign investment into Indian bonds, improve liquidity, and reduce costs of borrowing to the government.
- To facilitate India’s entry to the global bond indices so that its debt market becomes easily accessible for foreign investors.
Other Routes for Foreign Investments in Bonds
- The Medium Term Framework (MTF)
- A Foreign Portfolio Investment (FPI) regime for Central and State Government Securities (G secs and SDLs) with specific limits is imposed.
- Voluntary Retention Route (VRR)
- An arrangement that gives investors flexibility in that they must retain a share of their investment over a certain period.
