SEBI Eases Compliance Norms for FPIs Investing in Government Securities

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  • Last Updated on 12 September, 2025

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SEBI Compliance Norms FPIs Government Securities

Circular No. SEBI/HO/AFD/AFD-PoD-3/P/CIR/2025/127; Dated: 10.09.2025

1.Introduction

The Securities and Exchange Board of India (SEBI) has announced an important regulatory relaxation for Foreign Portfolio Investors (FPIs) that invest exclusively in government securities (G-Secs) through the fully accessible route. This move is intended to simplify compliance requirements, reduce procedural hurdles, and encourage greater foreign participation in the Indian government bond market.

2. Exemption From Disclosure Requirements

Under the revised framework, FPIs investing solely in G-Secs are now exempted from providing investor group details and certain other disclosure requirements that were earlier mandatory. This exemption is expected to significantly ease the compliance burden for such investors, as they will no longer be required to furnish detailed group-level information that may not be relevant for government securities investments.

3. Requirements for Material Changes

While certain disclosures have been relaxed, SEBI has clarified that Government Securities FPIs (GS-FPIs) must continue to maintain transparency in case of any material changes. Specifically, all such changes must be reported along with supporting documents as soon as possible and no later than 30 days from the occurrence of the change. This ensures that investor accountability is maintained while avoiding unnecessary procedural delays.

4. Role of CDSSF in Implementation

To facilitate smooth implementation of these provisions, SEBI has directed the Custodians and Designated Depository Participants Standards Setting Forum (CDSSF) to formulate a standard operating procedure (SOP) in consultation with SEBI. This SOP will provide uniform guidelines and operational clarity to custodians, depository participants, and FPIs, ensuring consistent application of the new norms.

5. Conclusion

The easing of compliance norms for FPIs investing exclusively in G-Secs reflects SEBI’s intent to promote ease of doing business and deepen India’s bond market. By reducing disclosure obligations while retaining essential transparency measures, SEBI strikes a balance between investor facilitation and regulatory oversight. The provisions of this circular will come into effect from 8th February 2026, providing adequate time for stakeholders to align with the new framework.

Click Here To Read The Full Circular

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied