SEBI eases Regulatory Compliance for FPIs investing only in Government Securities
Introduction
The Securities and Exchange Board of India (“SEBI”) vide circular dated 7 September 2026 (“Circular”), has further eased the regulatory compliance requirements applicable to Foreign Portfolio Investors (“FPIs”) investing exclusively in Government Securities (“G-Secs”).
The Circular modifies the Master Circular for Foreign Portfolio Investors, Designated Depository Participants and Eligible Foreign Investors dated 30 May 2024 (“FPI Master Circular”) by removing the requirement for such FPIs to furnish investor group details.
The amendment follows the Reserve Bank of India’s (“RBI”) decision in June 2026 to withdraw the concentration limit applicable to FPI investments in Government Securities through the General Route.
Key Changes
1. Removal of Investor Group Details Requirement
SEBI has modified the relevant provision under Part A of the FPI Master Circular to provide that:
“FPIs investing only in Government Securities shall not be required to furnish investor group details.”
Accordingly, FPIs whose investments are restricted exclusively to Government Securities are no longer required to furnish investor group details.
Further the amendment is significant because the exemption is no longer linked specifically to the Fully Accessible Route (“FAR”).
2. Earlier Position – Relaxation Limited to FAR
SEBI had, vide its circular dated 10 September 2025, introduced a specific relaxation for FPIs investing exclusively in Government Securities under FAR.
The relevant provision stated that:
“FPIs that invest exclusively in Government Securities under Fully Accessible Route shall not be required to furnish investor group details.”
The September 2026 Circular removes the reference to “under Fully Accessible Route”, thereby extending the exemption to FPIs investing only in Government Securities irrespective of the route of investment.
3. Liberalisation of the General Route
The distinction between FAR and the General Route became relevant following the RBI’s circular dated 5 June 2026.
Prior to the RBI’s June 2026 reforms, investments by FPIs in Government Securities through the General Route were subject to:
• a short-term investment limit;
• a security-wise investment limit;
• a concentration limit.
RBI subsequently withdrew these three requirements for FPI investments in Government Securities under the General Route. RBI also merged the earlier “general” and “long-term” investment sub-categories into a single investment limit for Central Government Securities and State Government Securities.
4. Rationale for the Latest SEBI Amendment
The removal of the concentration limit under the General Route has a direct bearing on the investor-group requirement.
SEBI has stated that, following RBI’s withdrawal of the prescribed concentration limit, identification of the investor group by an FPI investing only in Government Securities is no longer relevant. Accordingly, SEBI has removed the route-specific limitation and extended the exemption to all FPIs investing only in Government Securities.
The position may therefore be summarised as follows:
| Earlier Position | Position from 7 September 2026 |
| Exemption from furnishing investor group details applied to FPIs investing exclusively in Government Securities under FAR. | Exemption applies to FPIs investing only in Government Securities, irrespective of the investment route. |
5. Implementation and Effective Date
SEBI has directed Depositories, Custodians and Designated Depository Participants (“DDPs”) to make the necessary system changes to give effect to the amendment.
The Circular comes into force with immediate effect from 7 September 2026. Regulatory Perspective
The amendment represents a further rationalisation of the compliance framework applicable to FPIs investing exclusively in Government Securities.
Conclusion
SEBI’s latest Circular simplifies the compliance framework for FPIs investing exclusively in Government Securities by removing the requirement to furnish investor group details. The amendment extends the earlier FAR-specific relaxation to FPIs investing only in Government Securities generally, thereby aligning the SEBI reporting requirement with the revised regulatory framework applicable to Government Securities investments.
Official Circular:
SEBI Circular dated 7 September 2026 – Ease of regulatory compliances for FPIs investing only in Government Securities