The Securities and Exchange Board of India (Sebi) has eased compliance requirements for foreign portfolio investors (FPIs) that invest exclusively in Indian government securities, showed a circular issued on Monday.
The move is aimed at simplifying the regulatory process for overseas investors in Government Securities (G-Secs), following a change by the Reserve Bank of India (RBI) that removed concentration limits for such investments under the General Route, the default regulatory pathway for overseas investors entering the country’s debt market.
G-Secs are debt instruments issued by central or state governments to raise funds. For an overseas investor, these securities offer a way to gain exposure to Indian government debt without investing in shares or corporate bonds.
The exemption
The Sebi circular modifies an earlier provision in its master circular governing FPIs, designated depository participants (DDPs) and eligible foreign investors. The earlier provision stated that FPIs investing exclusively in G-Secs under the Fully Accessible Route (FAR) would not be required to provide investor group details.
FAR is a mechanism that allows eligible FPIs to invest in specified Indian government securities without being subject to the usual foreign investment limits applicable to government debt. The route was introduced to make Indian G-Secs more accessible to global investors.
The Monday circular broadens the exemption. It now states that FPIs investing only in Government Securities, or G-Secs, shall not be required to furnish investor group details. This means the relaxation is no longer restricted to FPIs investing through FAR; it applies more broadly to FPIs investing only in government securities.
Investor group details are information used by regulators to identify entities that belong to the same investor group or a connected investment structure. Such information can help regulators monitor concentration and ensure that investment limits are not breached.
The requirement has become less relevant after RBI, through its 5 June 2026 circular, withdrew the prescribed concentration limit for FPIs investing in G-Secs through the General Route. With that limit removed, the markets regulator said the need to identify an investor group for an FPI investing only in G-Secs was “no longer relevant”.
The circular will take effect immediately.
“Depositories, custodians and DDPs are advised to make necessary changes in their systems to effect the changes proposed above,” said Sebi in the circular.
