SEBI eases compliance norms for FPIs investing only in govt securities

Market regulator SEBI has relaxed compliance requirements for foreign portfolio investors (FPIs) that put money exclusively in government securities.

In a circular issued on Wednesday, SEBI said such investors, categorised as GS-FPIs, will not be required to provide investor group details at the time of registration and will be exempted from certain disclosure and compliance norms applicable to regular FPIs.

The move is aimed at streamlining procedures and attracting more long-term overseas investments in the sovereign debt market.

The Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019, were amended last month to pave the way for these changes.

Under the new framework, GS-FPIs will only be required to pay registration fees to designated depository participants (DDPs) at the time of renewal and will not be required to submit periodic declarations about changes in information unless there are material changes.

"In case of no change in information, FPIs will give declaration that there is no change in the information, as previously furnished. However, requirement of giving such declaration will not be applicable to GS-FPIs," the regulator said.

Investments by resident Indian individuals in GS-FPIs will be permitted only through the Liberalised Remittance Scheme (LRS) of the RBI, and such participation will be allowed only in global funds whose Indian exposure is below 50 per cent, SEBI said.

Further, periodic know-your-customer (KYC) reviews for such investors will now be harmonised with the review cycle of their bank accounts, as prescribed by the Reserve Bank of India.

At the same time, GS-FPIs will still be required to disclose material changes within 30 days and ensure compliance with restrictions on resident Indian participation, SEBI said.

SEBI has also allowed existing FPIs to transition into GS-FPIs by declaring their intent to their DDPs and divesting all non-government securities holdings. Similarly, GS-FPIs will be permitted to switch back to regular FPI status by complying with the additional requirements.

The changes will take effect from February 8, 2026.