Ease of regulatory compliances for FPIs investing only in Government Securities
Summary
This circular amends the FPI Master Circular to ease regulatory compliances for Foreign Portfolio Investors investing exclusively in Government Securities. It introduces exemptions from investor group details, periodic KYC declarations, and certain information change notifications for these specific investors. The document also outlines procedures for transitioning between regular FPI and GS-FPI status and sets an effective date of February 8, 2026.
Text
FPIs that invest exclusively in Government Securities under Fully Accessible Route shall not be required to furnish investor group details.
The provisions mentioned at a to c above shall not apply to ‘FPIs investing only in Government Securities’ (hereinafter referred to as “GS-FPIs”). However, they shall be subject to the provision that contribution of resident Indian individuals shall be made through the LRS notified by RBI and shall be in global funds whose Indian exposure is less than 50%.
However, GS-FPIs shall only pay the fees to their DDPs. The requirement of informing any change in information shall not be applicable to GS-FPIs.
However, requirement of giving such declaration shall not be applicable to GS-FPIs.
However, in case of GS-FPIs, all material changes (both Type I and Type II) shall be informed and supporting documents (if any) shall be provided by such FPIs as soon as possible and within 30 days of such change.
New FPI applicants willing to invest only in Government Securities may identify themselves as GS-FPIs by making appropriate declaration to their DDPs at the time of on boarding.
Further, regular FPIs (existing as well as prospective) may also transition to GS-FPIs, by making appropriate declaration to their DDPs.
Upon receipt of such transition requests from FPIs, DDPs shall ensure the FPI has divested all its holdings, except the securities permitted for GS-FPIs, i.e., Government Securities. Further, DDPs along with Depositories shall ensure that the FPI has either closed its demat account or there are fail-safe mechanisms in place to ensure assets other than Government Securities cannot be held in such demat account of the FPI.
Similarly, a GS-FPI may also transition to a regular FPI by making appropriate declaration to their DDPs. For such transition, the GS-FPI shall provide incremental information and submit documents as are applicable to a regular FPI. From the date of transition becoming effective, the FPI shall be required to comply with regulatory requirements as applicable to a regular FPI.
In case of GS-FPIs, periodicity of KYC review by custodians shall be harmonized with the applicable periodicity of KYC review of their respective bank accounts, as prescribed by RBI.
Depositories, Custodians and Designated Depository Participants are advised to make necessary changes in their systems to effect the changes proposed above.
Custodians and Designated Depository Participants Standards Setting Forum (CDSSF), in consultation with SEBI, shall formulate a standard operating procedure for implementing the provisions of this Circular.
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Source: SecMarx — Ease of regulatory compliances for FPIs investing only in Government Securities. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.