SEBI Eases Rules for Foreign Investors in Government Bonds

The Securities and Exchange Board of India (SEBI) announced that its revised regulations for foreign investors investing exclusively in Indian government securities will come into effect from 8 February 2026. The rules were initially approved at SEBI’s board meeting in June 2025.

Key Highlights:

• Applicability:
  • Applies to Foreign Portfolio Investors (FPIs) who invest only in Indian government bonds under the fully accessible route.
• Relaxed Disclosure Requirements:
  • FPIs under this route need not disclose their investor group details, unlike regular FPIs investing in equity or other debt instruments.
  • Exemptions also cover certain reporting requirements applicable to regular FPIs.

About Fully Accessible Route (FAR)

• Introduced by the RBI in April 2020.
• Permits non-resident investors to invest in specified categories of government securities without restrictions.
• Aimed at attracting global capital flows into India’s bond market.

Role of FPIs:

• FPIs are foreign entities or individuals allowed to invest in Indian securities (equities, corporate debt, or government bonds).
• They bring foreign capital, enhance liquidity, and contribute to market depth.
• Under the FAR, FPIs can invest in government securities with fewer compliance burdens, promoting ease of access and long-term investments.