The Reserve Bank of India (RBI) has expanded the list of specified Government securities that non-residents can invest in under the Fully Accessible Route (FAR) by including 10-year Sovereign Green Bonds (SGrBs).
The central bank has decided to designate SGrBs of 10-year tenor to be issued by the Government in the second half of the fiscal year 2024-25 as ‘specified securities’ under the FAR.
This comes in the wake of Indian Government Securities (G-Secs) being included in JPMorgan Chase’s benchmark Emerging Markets Bond Index Global Diversified (GBI-EM GD) index starting June 28, 2024.
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Further, the G-Secs will be included in the Bloomberg EM Local Currency Government indices, starting January 2025. Also, FTSE Russell will add G-Secs to the FTSE Emerging Markets Government Bond Index (EMGBI), with the inclusion starting in September 2025.
Separate channel
The RBI, in consultation with the Government, had introduced a separate channel – FAR -- in 2020 to enable non-residents to invest in specified Government of India dated securities.
Eligible investors can invest in specified Government securities without being subject to any investment ceilings.
These investors include Foreign Portfolio Investors (FPIs), Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and other entities permitted to invest in Government Securities under the Debt Regulations.
As per the indicative calendar for issuance of Government dated securities, including Sovereign Green Bonds (SGrB), for the second half of the fiscal year 2024-25 (October 01, 2024 to March 31, 2025), the Government will raise ₹6.61 lakh crore.
Out of this, the Government will mop up ₹20,000 crore via four SGrB issuances (two of 10-years tenor and two of 30-years tenor) of Rs 5,000 crore each.