SEBI Plans Lighter FPI Rules for Government-Bond-Only Investors
Why in the news
SEBI wants lighter compliance for foreign funds that hold nothing but Indian government bonds.
Key facts
- IGBFPI = Indian Government Bond FPI, assigned at registration or on transition.
- Global indices: JP Morgan’s emerging-market bond gauge, Bloomberg’s EM Local Currency Government Index and FTSE Russell’s EM Government Bond Index (from September 2025).
| Aspect | Proposal |
|---|---|
| Existing FPIs opting in | Declare intent, sell non-eligible holdings, close related demat and trading accounts |
| Current NRI/OCI/RI limit | 25% each, 50% together |
| NRI/OCI under plan | No cap on controlling an IGBFPI |
| Resident Indians | Some restrictions stay |
Purpose and significance
- Draw passive foreign inflows through simpler compliance.
- Improve liquidity and depth of government securities.
Exam angle
- Routes: VRR and FAR.