SEBI’s Consultation Paper: Relaxing Compliances For FPI Applicants Investing Only In IGBs

Public comments are sought before 3 June 2025; FPI investment in FAR eligible securities crossed INR 3 lakh crore mark in March 2025

FinTech BizNews Service

Mumbai, May 14, 2025: SEBI issued Consultation Paper on 13 May 2025 on proposal to facilitate relaxation in regulatory compliances for FPI (Foreign Portfolio Investors) applicants investing only in Indian Government Bonds:

A new category of FPIs (“IGB-FPI”) that exclusively invest in Indian Government Bonds (“IGBs”) under Voluntary Retention Route (VRR) and Fully Accessible Route (‘FAR’)

Currently, various channels available for investment in debt instruments by non-residents are as follows:

a) General Route

b) Voluntary Retention Route

c) Fully Accessible Route

As per the Deloitte research, FPI investment in FAR eligible securities crossed INR 3 lakh crore mark in March 2025. Indicative value of aggregate holding of FPIs in FAR eligible IGBs is given below:

(Source: CCIL)

# - converted into USD million based on prevailing conversion rates

Further, the total investment limits allotted under VRR stands at INR 1.75 lakh crores as on March 28, 2024 and INR 2.05 lakh crores as on March 28, 2025.

SEBI consultative paper seeks comments on the rationalisation proposed as under:

1. IGB-FPI applicants need not open trading and demat accounts nor obtain CP code.
2. KYC review of IGB- FPI be as prescribed by RBI, i.e. once in 2 years / 8 years /10 years for high/medium/low risk customers respectively.
3. IGB-FPIs shall not be required to furnish investor group details.
4. Permit NRI/OCI/RI contribution in the corpus of IGB-FPI without any restrictions. Further, it is proposed to permit NRI/OCI/RI to be in control of IGB-FPI.  (Note that the requirement of RIs to contribute through the Liberalised Remittance Scheme and in global funds whose Indian exposure is less than fifty percent, shall continue to apply.)
5. the timeline for intimation of material changes (both Type I and Type II) and submission of supporting documents (if any), by IGB-FPIs may be relaxed to 30 days.
6. Transition between regular FPI and IGB-FPI possible.

Public comments are sought before 3 June 2025.