Foreign investors barred from India’s new 14-year, 30-year debt – RBI

The Reserve Bank of India (RBI) has on Monday imposed new restrictions on foreign portfolio investors (FPIs) purchasing Indian government bonds. Effective immediately, FPIs will no longer have unrestricted access to newly issued 14-year and 30-year government bonds.

Consequently, future issuances of Government Securities in these tenors shall not be available for investment under the Fully Accessible Route.” the RBI said in a statement, adding that the decision was taken on a review and in consultation with the government.

The central bank’s decision aims to manage foreign inflows and potentially reduce volatility in the bond market. Existing holdings of these bonds will remain unaffected.

“Existing stocks of Government Securities in 14-year and 30-year tenors already included as ‘specified securities’ under the Fully Accessible Route shall, however, continue to be available under the Fully Accessible Route for investments by non-residents in the secondary market.”

While the move is expected to have a limited impact on the market, it signals a more cautious approach to foreign investment in India’s long-term debt.

Attribution: Reuters & Reserve Bank of India