Introduction: The Reserve Bank of India (RBI) has recently issued a circular (RBI/2023-24/81) expanding investment opportunities for non-residents in the Government Securities market. The circular, dated November 08, 2023, includes Sovereign Green Bonds in the ‘Fully Accessible Route’ (FAR), opening new avenues for investors. This development holds significant implications for both domestic and international investors seeking sustainable investment options.
Detailed Analysis: The circular, referencing the Press Release on ‘Issuance Calendar for Marketable Dated Securities for October 2023 – March 2024,’ highlights the RBI’s move to designate all Sovereign Green Bonds issued by the Government in the fiscal year 2023-24 as ‘specified securities’ under the FAR. This strategic decision aligns with global efforts towards environmental sustainability, encouraging investments in eco-friendly projects and initiatives. Non-resident investors can now participate in the Government Securities market without restrictions, making it an attractive prospect for those interested in socially responsible investments.
The inclusion of Sovereign Green Bonds in the FAR signifies a proactive approach by the RBI, promoting sustainable finance and green investments. This move not only diversifies the investment landscape but also strengthens the Government’s commitment to environmental conservation. It also reflects the growing importance of Environmental, Social, and Governance (ESG) factors in investment decisions, catering to the evolving preferences of investors worldwide.
Conclusion: The RBI’s decision to incorporate Sovereign Green Bonds in the Fully Accessible Route marks a significant milestone in India’s financial landscape. This inclusive approach not only attracts foreign investments but also promotes environmental sustainability, reinforcing India’s position as a responsible player in the global financial market. Investors, both domestic and international, can now explore opportunities that align with their ethical and financial goals, contributing to a greener, more sustainable future. As the investment landscape continues to evolve, staying informed about such regulatory changes is essential for making well-informed investment decisions in the dynamic world of finance.
RESERVE BANK OF INDIA
November 08, 2023
All participants in Government Securities market
‘Fully Accessible Route’ for Investment by Non-residents in Government Securities – Inclusion of Sovereign Green Bonds
A reference is invited to the Press Release on ‘Issuance Calendar for Marketable Dated Securities for October 2023 – March 2024’ dated September 26, 2023, issued by the Reserve Bank, notifying, inter alia, the issuance calendar for Sovereign Green Bonds for the fiscal year 2023-24. Attention is also invited to the Fully Accessible Route (FAR) introduced by the Reserve Bank, vide A.P. (DIR Series) Circular No. 25 dated March 30, 2020, wherein certain specified categories of Central Government securities were opened fully for non-resident investors without any restrictions, apart from being available to domestic investors as well.
2. The Government Securities that are eligible for investment under the FAR (‘specified securities’) were notified by the Bank, vide circular no. FMRD.FMSD.No.25/14.01.006/2019- 20 dated March 30, 2020, circular no. FMRD.FMID.No.04/14.01.006/2022-23 dated July 07, 2022 and circular no. FMRD.FMID.No.07/14.01 .006/2022-23 dated January 23, 2023.
3. It has now been decided to also designate all Sovereign Green Bonds issued by the Government in the fiscal year 2023-24 as ‘specified securities’ under the FAR.
4. The Directions contained in this circular have been issued under Section 45W of Chapter IIID of the Reserve Bank of India Act, 1934 and are without prejudice to permissions/ approvals, if any, required under any other law.
5. These Directions shall be applicable with immediate effect.
Chief General Manager