What changed
Previously, only certain categories of Central Government securities were eligible under the Fully Accessible Route (FAR) for non-resident investors. Now, all Sovereign Green Bonds issued in FY 2022-23 have been added to this list, making them fully accessible without restrictions.
What it means for you
This move expands the pool of green investment options for foreign investors, potentially increasing demand for Sovereign Green Bonds. Banks and market participants can expect improved liquidity and pricing in this segment, as non-resident participation broadens the investor base.
What you must do
- Update your systems and documentation to reflect Sovereign Green Bonds as FAR-eligible securities.
- Inform your treasury and compliance teams about the immediate applicability of this circular.
- Review your bond portfolio for opportunities to facilitate non-resident investments in these green bonds.
- Monitor market reactions and adjust pricing strategies to accommodate increased foreign demand.
Who it affects
All participants in the Government Securities market, Non-resident investors in Indian bonds, Treasury departments of banks and primary dealers, Compliance and operations teams handling FAR transactions
What is the Fully Accessible Route (FAR)?
FAR is a route introduced by RBI in March 2020 that allows non-resident investors to invest in specified Central Government securities without any restrictions, alongside domestic investors.
Which bonds are now included under FAR?
All Sovereign Green Bonds issued by the Government of India in the fiscal year 2022-23 have been designated as 'specified securities' under FAR.
When does this circular take effect?
The directions are applicable with immediate effect from January 23, 2023.