RBI Expands FAR Scope, Opens 10-Yr Sovereign Green Bonds to Non-Residents

FAR Overview 

Through the ‘Fully Accessible Route’ (FAR),  the Reserve Bank enables non-residents to invest in specified Government of India dated securities. Eligible investors can invest in specified Government securities without being subject to any investment ceilings.

Expansion of Investment Options

The Reserve Bank of India (RBI) has broadened the range of specified government securities available for non-resident investors under the Fully Accessible Route (FAR) by adding 10-year Sovereign Green Bonds (SGrBs) to the list.

The inclusion of green bonds in the FAR category is expected to attract greater foreign investor interest. These green bonds are designed to help the government raise capital to fund sustainable initiatives for public sector projects.

Investors eligible to invest through the FAR route include Foreign Portfolio Investors (FPIs), Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and other entities authorized to invest in Government Securities under the Debt Regulations.

The central bank has announced that the 10-year Sovereign Green Bonds (SGrBs) to be issued by the Government in the latter half of the 2024-25 fiscal year will be classified as ‘specified securities’ under the Fully Accessible Route (FAR).

According to the provisional schedule for the issuance of government securities, including Sovereign Green Bonds (SGrBs), for the second half of the fiscal year 2024-25 (from October 1, 2024, to March 31, 2025), the government plans to raise ₹6.61 lakh crore. 

Background and Context

This move follows the inclusion of Indian Government Securities (G-Secs) in JPMorgan Chase’s benchmark Emerging Markets Bond Index Global Diversified (GBI-EM GD), which took effect on June 28, 2024.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.