Sebi Eases Compliance Norms for Foreign Portfolio Investors (FPIs) Investing in Government Securities

New Delhi, September 11: The Securities and Exchange Board of India (SEBI) has announced that it has eased norms in regards to investments by Foreign Portfolio Investors (FPIs) in government securities in India. This move is aimed at simplifying investment compliance and attracting more long-term overseas investments in India’s sovereign debt market.

FPIs No Longer Require to Furnish Investor Group Details

The main amendment is that FPIs investing entirely under the fully accessible route will no longer be required to submit investor group details. Now, as per the SEBI circular, FPIs that invest solely in government securities (GS-FPIs) are exempt from certain disclosure and reporting requirements that apply to regular FPIs. They will now only have to pay fees to their designated depository participants (DDPs) for renewing their registration every three years. Lastly, they will not be required to submit periodic declarations unless there are material changes in the information provided by them previously.

Investments By Individuals

Apart from providing clarification about the new rules for FPIs, SEBI also clarified new rules about investments done by resident Indian individuals in GS-FPIs. Now, if a resident Indian individual invests in GS-FPI, such investment will only be allowed through the Liberalised Remittance Scheme (LRS) of the Reserve Bank of India. Furthermore, such investment will be restricted only to global funds with less than 50% exposure to India. SEBI also clarified that both new and existing FPIs can transition into GS-FPI status with appropriate declarations. On the other hand, GS-FPIs can also revert to regular FPI status by fulfilling additional requirements.

FPIs Must Inform About Material Changes Within 30 Days

Although SEBI has reduced the compliance requirements for GS-FPIs, it has mandated that FPIs must inform SEBI about any material changes in structure or operations within 30 days, which must be supported by required and relevant documents. Additionally, SEBI has aligned the Know Your Customer (KYC) review cycle for GS-FPIs with the review norms applicable to their bank accounts, as prescribed by the Reserve Bank of India.

The new framework will be effective from February 8, 2026. SEBI has asked custodians and designated depository participants, along with their standards-setting forum, to make necessary changes in their systems so that the revised structure can be effectively implemented.

REF: https://www.sebi.gov.in/legal/circulars/sep-2025/ease-of-regulatory-compliances-for-fpis-investing-only-in-government-securities_96549.html

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