NRIs can now invest in specified govt. bonds

The Reserve Bank of India (RBI) logo is pictured outside its head office in Mumbai May 3, 2011. India's central bank raised interest rates by a sharper-than-expected 50 basis points on Tuesday and said fighting inflation is its priority, even at the expense of short-term growth. The rate rise was its ninth since March 2010, and exceeded market and economists' expectations for a 25 basis point rise, although the case for stronger action had been building since March headline inflation reached nearly 9 percent. REUTERS/Danish Siddiqui (INDIA - Tags: BUSINESS)

The Reserve Bank of India (RBI) has introduced a separate channel, namely ‘Fully Accessible Route’ (FAR), to enable non-residents to invest in specified government bonds with effect from April 1.

The move follows the Union Budget announcement that certain specified categories of government bonds would be opened fully for non-resident investors without any restrictions.

“Eligible investors can invest in specified government securities without being subject to any investment ceilings. This scheme shall operate along with the two existing routes, viz., the Medium Term Framework (MTF) and the Voluntary Retention Route (VRR),” the RBI said.

“This will substantially ease access of non-residents to Indian government securities markets and facilitate inclusion in global bond indices. This would facilitate inflow of stable foreign investment in government bonds,” the Finance Ministry tweeted.