Exclusion of New Issuances in 14-year and 30-year Tenor Securities from the Fully Accessible Route for Investment by Non-residents
The Reserve Bank of India (RBI) introduced the Fully Accessible Route (FAR) for investment in government securities by non-residents via A.P. (DIR Series) Circular No. 25 dated March 30, 2020. This initiative opened certain specified categories of Central Government securities fully to non-resident investors without any restrictions, while remaining available to domestic investors as well.
To define the eligibility criteria for government securities under the FAR, the RBI issued several circulars. Initially, the eligible government securities were notified through circular no. FMRD.FMSD.No.25/14.01.006/2019-20 dated March 30, 2020. Subsequent updates were provided through circular no. FMRD.FMID.No.04/14.01.006/2022-23 dated July 07, 2022, circular no. FMRD.FMID.No.07/14.01.006/2022-23 dated January 23, 2023, and most recently, circular no. FMRD.FMID.No.04/14.01.006/2023-24 dated November 08, 2023.
After a thorough review and consultation with the Government, it has been decided to exclude all new securities with 14-year and 30-year tenors from the FAR. Consequently, future issuances of Government Securities in these tenors will not be available for investment under the FAR. However, existing stocks of Government Securities in 14-year and 30-year tenors, which have already been included as specified securities under the FAR, will continue to be available for non-resident investments in the secondary market.
For Foreign Portfolio Investors (FPIs), investments in new Government Securities with 14-year and 30-year tenors issued henceforth will be regulated under the investment limits prescribed in A.P. (DIR Series) Circular No. 03 dated April 26, 2024, and will be subject to the conditions stipulated in A.P. (DIR Series) Circular No. 31 dated June 15, 2018, as amended over time. Alternatively, these investments will be reckoned under the limits and conditions set forth in A.P. (DIR Series) Circular No. 22 dated February 10, 2022, depending on the applicable criteria.
These directions, issued under Section 45W of Chapter IIID of the Reserve Bank of India Act, 1934, do not override permissions or approvals that may be required under other laws. The directives outlined in this circular are effective immediately.
This adjustment in policy reflects the dynamic nature of investment regulations and underscores the importance of periodic reviews to ensure alignment with current economic and financial objectives. By excluding new issuances of 14-year and 30-year tenors from the FAR, the RBI aims to manage the investment landscape more effectively, balancing the interests of domestic and non-resident investors while maintaining the stability and attractiveness of the Indian bond market.
