All new Indian government bonds with a 14-year and 30-year tenor will no longer be accessible to foreign portfolio investors (FPIs) under the fully accessible route, the central bank said in a release on Monday.
“Consequently, future issuances of government securities in these tenors shall not be available for investment under the Fully Accessible Route (FAR),” the Reserve Bank of India said, adding that the decision was taken in consultation with the government.
Existing 14-year and 30-year debt, however, which was already specified as securities that were available under the FAR will continue to be accessible to non-residents for investments in the secondary market, it added.
Investments by FPI’s in the new 14-year and 30-year tenors will be as per the existing investment limits prescribed by the RBI, applicable at the point of issuance.
The new directions come into effect immediately, the central bank said.
Foreigners currently hold around $1 billion worth of the existing 30-year bonds, latest data shows.
“This should not have any major negative impact, as government has already stopped issuing 14-year securities, while we do not see large investments piling up in the 30-year segment,” a trader with a foreign bank said.
