RBI Expands Fully Accessible Route to Include Sovereign Green Bonds

The Reserve Bank of India (RBI) has expanded the Fully Accessible Route (FAR) to include 10-year Sovereign Green Bonds (SGrBs). This marks a significant step towards promoting sustainable financing and encouraging greater participation from non-resident investors in India’s green initiatives. This initiative aims to attract foreign capital to fund India’s sustainable development projects while enhancing the appeal of Indian Government Securities (G-Secs) on the global stage.

The FAR, introduced in 2020, provides a dedicated channel for non-residents to invest in specified government securities without any investment ceilings. Eligible investors mean any “person resident outside India” as defined in Section 2(w) of the Foreign Exchange Management Act, 1999, and include Foreign Portfolio Investors (FPIs), Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and other authorized entities.

Key Highlights:

Inclusion of Sovereign Green Bonds: For the first time, 10-year SGrBs have been designated as “specified securities” under FAR. These bonds aim to fund public sector projects that support sustainability.

Issuance Schedule: SGrBs issued during the second half of the 2024-25 fiscal year (October 1, 2024-March 31, 2025).

Target Investment: Out of the ₹6.61 lakh crore set to be raised through government securities in this period, ₹20,000 crore will be raised via four SGrBs issuances (two with 10-year tenure and two with 30-year tenure). Each issuance will be worth ₹5,000 crore.

The directive, effective immediately, reflects a robust policy measure to enhance India’s fiscal and environmental goals and is expected to enhance liquidity and global participation in the Indian bond market.

The move follows India’s inclusion in prominent global bond indices such as JPMorgan Chase’s Emerging Markets Bond Index (GBI-EM GD) in June 2024, Bloomberg’s EM Local Currency Government Index in January 2025, and FTSE Russell’s Emerging Markets Government Bond Index (EMGBI) starting September 2025.

In August, the RBI had allowed trading and settlement of SGrBs within India’s International Financial Services Centre (IFSC).