What changed
RBI designated 10-year Sovereign Green Bonds issued in the second half of FY2024-25 as 'specified securities' under the Fully Accessible Route (FAR). This means non-resident investors can now invest in these bonds without any restrictions, similar to other FAR-eligible government securities.
What it means for you
Banks and lenders can expect increased foreign portfolio inflows into Sovereign Green Bonds, potentially lowering yields and improving liquidity in this segment. This aligns with India's green finance goals and broadens the investor base for sustainable debt instruments.
What you must do
- Update internal systems to classify 10-year Sovereign Green Bonds as FAR-eligible for non-resident clients.
- Inform treasury and compliance teams about the immediate applicability of this circular.
- Monitor foreign investment limits and reporting requirements for these new specified securities.
- Advise clients on the unrestricted access for non-residents to these green bonds.
Who it affects
All participants in the Government Securities market, Non-resident investors in Indian debt, Banks and primary dealers dealing in G-Secs, Treasury departments of financial institutions
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 government securities without any restrictions, such as limits or lock-in periods.
Which specific bonds are now included under FAR?
Sovereign Green Bonds with a 10-year tenor issued by the Government in the second half of fiscal year 2024-25 are now designated as specified securities under FAR.
When does this circular take effect?
The directions are applicable with immediate effect from November 7, 2024, the date of the circular.