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Investment by Non Residents in Government Securities through the Fully Accessible Route

Fully Accessible Route

The Finance Minister, Mrs. Nirmala Sitharaman, with the announcement of the Union Budget on 01 February 2020, brought out various benefits for Non Residents to Invest in India. This is to boost the amount of foreign direct investment in the country. One of the benefits for Non-residents is for investing in Government Securities. 

Government securities are issued by the government, which is generally considered as a bond or some form of obligation which is related to the debt. These securities have to be paid back at the end of the maturity period. These securities are considered as low-risk investments.

The Reserve Bank of India, in a notification, decided to keep access to government securities open to foreign investors.  Apart from boosting the amount of foreign investment in the country, the government wanted its place in the global bond indices. In the announcement made by the finance minister, the government securities would be available to foreign investors through the Fully Accessible Route (FAR).

Fully Accessible Route- What is it?

Fully Accessible route is the mode of investment that is made by Non Residents in Government securities. The fully accessible route is something like a separate channel for investments made by Non-residents. This is specially made for Government Securities. These securities are also known as G-Secs. Specified securities are securities that are issued by the government. There is a process of special notification for this form of securities. This is carried out by the RBI. These securities are for the FAR route as prescribed by the government.

Features of the FAR

  • This regulation prescribes a ceiling limit on the investment made by non-residents. However, for the investment in securities through the FAR, there is no particular ceiling limit that is prescribed. These securities are allowed for investment, which is made by domestic investors as well as non-resident investors.
  • Under the FAR previously listed, investor investments would be allowed.
  • The following also can invest in this form of securities:
    • Foreign Portfolio Investors
    • NRI- Non-Resident Indians
    • OCI- Overseas Citizen of India
    • Entities
    • Eligible Investors who are classified to invest under the FAR route
    • The person, who is resident outside India, as defined under the Foreign Exchange Management Act, is considered as an eligible investor under this.

The above parties can make their investment through the debt obligations through specific existing routes.

  • The laws which apply to this form of investment would be the regulations that are governed by the RBI and the Foreign Exchange Management Law (FEMA).
  • Apart from this, the Foreign Portfolio Limit for corporate bonds has been increased from 9% to 15 %. The limit for government securities (G- Secs) has remained constant at 6% and has not increased.

Reasons for Fully Accessible Route

  • To make Government Securities a part of the Global Bond Indices Index;
  • To improve the amount of investment in India;
  • Increase in the amount of foreign exchange funds which flow into India; and
  • To have access to the Global index.

The issuance of Government Securities, which have the following period (tenor) – 5 Years, ten years, and 30 years, will be allowed for investment as a specified security under the fully accessible route (FAR), as mentioned by the Reserve Bank of India. There are specific existing securities which are present under this Fully Accessible Route:

  • 6.18 percent government security 2024
  • 7.32 percent government security 2024
  • 6.45 percent government security 2029
  • 7.26 percent government security 2029
  • 7.72 percent government security 2049

Therefore apart from the above securities, the Reserve Bank of India would consider specified securities where investment by non-residents would be allowed. This move was considered as Indian Government bonds would become a part of the global bond indices. However, this would only be after fulfilling certain conditions to be a part of the global bond indices. At present, the top global bond indices include Bloomberg Barclays Global Aggregate Index, FTSE Russel Asia Pacific Government Bond Index, and JPMorgan Government Bond Index-Emerging Markets.


In the Union Budget, the finance minister had brought out sweeping changes regarding certain benefits which could be availed by Non Residents. Access of government securities is allowed to Non Residents under this route. The investment in the government securities should be only through a specified route, the Fully Accessible Route (FAR). This route is available for domestic investors as well. This requirement was brought out so that Government securities could be a part of the Global Bond Indices. By bringing out such a route, the government has improved the amount of foreign investment that comes into India.

Official notification regarding this can be accessed from the below link:


PDF Source: RBI Notification

Varun Hariharan

Varun Hariharan has completed the Legal Practice Course from BPP Law School, Manchester. He has a Masters in Commercial and Corporate Law from the Queen Mary University of London and LLB Honours from Bangor University, UK. He specialises in law related to corporate, artificial intelligence and technology law.

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