What changed
Two existing securities (ISINs IN0020220011 and IN0020220029) are now eligible under FAR. Additionally, all future issuances of 7-year and 14-year government securities will automatically qualify as specified securities under this route.
What it means for you
Non-resident investors can now invest in these securities without any restrictions, alongside domestic investors. This expands the pool of eligible G-secs under FAR, potentially increasing foreign portfolio inflows and deepening the government securities market. Banks and primary dealers should expect higher demand for these tenors from foreign investors.
What you must do
- Update your internal systems and reporting frameworks to include the new specified securities under FAR.
- Inform your treasury and NRI client-facing teams about the expanded eligibility for 7-year and 14-year G-secs.
- Monitor foreign investment limits and compliance with FAR guidelines for these securities.
- Review your investment portfolio to assess potential opportunities from increased non-resident participation.
Who it affects
All participants in the Government securities market, Primary dealers, Banks with treasury operations, Non-resident investors and their custodians, Portfolio managers handling NRI investments
What is the Fully Accessible Route (FAR)?
FAR was introduced by RBI following the Union Budget 2020-21 to allow non-resident investors to invest in specified central government securities without any restrictions, while also being available to domestic investors.
Which securities are newly added under FAR?
Two specific securities: 7.10% GS 2029 (ISIN IN0020220011) and 7.54% GS 2036 (ISIN IN0020220029), plus all new issuances of 7-year and 14-year government securities.
When does this circular take effect?
The directions are applicable with immediate effect from July 7, 2022.