RBI opens up specified government securities fully for foreign investors

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In line with the Budget announcement, the Reserve Bank on Monday opened certain specified categories of government securities (g-secs) for non-resident investors as part of an initiative to deepen the bond market. Accordingly, a separate route namely, Fully Accessible Route (FAR) for investment non-residents in securities issued by the Government of India has been notified, the RBI said in a notification.

Finance Minister Nirmala Sitharaman in the Budget for 2020-21 had announced that "certain specified categories of Government securities would be opened fully for non-resident investors, apart from being available to domestic investors as well."

This will come under an overall FPI limit of above 6 per cent but those falling under specified securities can be subscribed without any restriction.

Following securities -- G-sec with maturity 2024 with coupon rate of 6.18 per cent and 7.32 per cent, G-sec with maturity 2029 with coupon rate of 6.45 per cent and 7.26 per cent, and G-sec with maturity 2049 with coupon rate of 7.72 per cent.

This will be effective from the date on which the scheme comes into effect, it said, the directions will come into effect from April 1.

"The Reserve Bank shall notify the Government securities that shall be eligible for investment under the FAR. These securities will continue to be eligible for investment by residents. ‘Specified securities’, once so designated, shall remain eligible for investment under the FAR until maturity," it said.

In addition, all new issuances of Government securities of 5-year, 10-year and 30-year tenors from the financial year 2020-21 will be eligible for investment under the FAR as ‘specified securities’, it said.

The Reserve Bank may add new tenors or change the tenors of new securities to be designated as ‘specified securities’ from time to time, it said.