SEBI Floats Idea to Ease Norms for FPIs Investing in Govt Bonds

Markets regulator Securities and Exchange Board of India (SEBI) on Tuesday proposed easing rules for foreign portfolio investors (FPIs) that invest solely in Indian Government Bonds (IGBs) through the Voluntary Retention Route (VRR) and the Fully Accessible Route (FAR).

According to SEBI, total holdings of FPIs in FAR-eligible government bonds came at ₹3 trillion as of March 2025.

“It is proposed to align the periodicity of KYC review for IGB-FPIs with the timelines prescribed by the RBI for their regulated entities, to facilitate the ease of doing business,” a consultation paper from the regulator said.

SEBI also highlighted that these entities should not be mandated to furnish investor group details. “Simplification of the onboarding process and rationalisation of ongoing regulatory compliances is expected to further help in facilitating investments by foreign portfolio investors (FPIs) in Indian government bonds,” Sebi said.

According to the regulator, the rules have been eased following announcements by several global index providers to include Indian Government Bonds (IGBs) in their respective bond indices. They include JPMorgan Global EM Bond Index (starting June 2024), Bloomberg EM Local Currency Government Index (starting January 2025) and FTSE Russell Emerging Markets Government Bond Index (starting September 2025).