Summary of this article
Sebi removed investor group details requirement for foreign investors.
FPIs investing exclusively in government securities receive compliance relief.
The decision follows RBI withdrawing concentration limits in June.
Securities and Exchange Board of India (Sebi) has eased regulatory compliances for foreign portfolio investors investing only in government securities. In a circular issued on September 7, Sebi eliminated the requirement for foreign portfolio investors that invest only in government securities to submit investor group details, streamlining market entry and reducing procedural burdens for overseas institutions.
New Rules For Foreign Investors Investing In Govt Securities
According to the Sebi circular, Sebi has amended its master circular governing foreign portfolio investors, designated depository participants, and eligible foreign investors. Setting out the exact scope of the preliminary adjustments made last year, the regulator detailed the modifications made to its previous compliance guidelines.
"Sebi vide circular dated September 10, 2025 amended the "Master Circular for Foreign Portfolio Investors, Designated Depository Participants and Eligible Foreign Investors" No. Sebi/HO/AFD/AFD-POD-2/P/CIR/P/2024/70 dated May 30, 2024 (hereinafter referred to as "Master Circular") to facilitate ease of regulatory compliances for 'FPIs investing only in Government Securities'," Sebi said.
Earlier on September 10, 2025 the regulator had introduced an exemption which applied solely to sovereign debt investments routed through the fully accessible route (FAR). Notably, FAR is a Reserve Bank of India (RBI) framework which allows FPIs to buy specified Indian government bonds without any investment limits. Recalling the specific text that was originally inserted into the regulations, the market watchdog provided the prior exemption language.
"FPIs that invest exclusively in Government Securities under Fully Accessible Route shall not be required to furnish investor group details," Sebi said.
In its latest circular, Sebi broadened the scope of the compliance relief to cover all FPIs who allocate capital only to government securities, irrespective of the investment channel.
Under the revised framework, the regulator has removed the specific route limitation entirely. Revealing the updated text that will govern these market participants moving forward, the regulator issued its final modification.
"FPIs investing only in Government Securities shall not be required to furnish investor group details," Sebi said.
The regulator has also directed depositories, custodians, and designated depository participants to make the necessary changes to their electronic systems and operating frameworks to facilitate the enforcement of updated rules. Instructing the relevant market infrastructure institutions on their next steps, the regulator mandated system upgrades.
"Depositories, Custodians and Designated Depository Participants are advised to make necessary changes in their systems to effect the changes proposed above," Sebi said.
Why Has Sebi Eased Compliance For Foreign Investors
The decision to streamline and smoothen regulatory compliances for FPIs follows policy measures announced by the central bank to make domestic sovereign securities more accessible to global capital. Outlining the initial regulatory catalyst for the change, the market regulator pointed to a recent move by the central bank.
"With a view to provide greater ease of investment to FPIs, Reserve Bank of India vide circular dated June 05, 2026, has inter alia withdrawn the requirement for FPIs investing in Government Securities through the General Route to comply with the prescribed concentration limit," Sebi said.
Earlier on June 5, the RBI withdrew the concentration limit requirement for foreign portfolio investors purchasing government securities through the General Route.
Prior to the issuance of the latest circular, foreign entities investing in the Indian market were required to make investor group disclosures to ensure that related accounts under common ownership or control did not collectively breach investment ceilings and concentration caps in debt securities. Concluding that the elimination of concentration limits made investor tracking redundant, the regulator officially ended the mandate.
"Consequently, the requirement for identification of investor groups by an FPI investing only in Government Securities is no longer relevant and is therefore being removed," Sebi said.
Sebi’s decision to ease regulatory compliances for FPIs investing only in Government Securities is expected to increase the ease of doing business for global asset managers, sovereign wealth funds, and pension funds participating in the Indian bond market.
