**Executive Summary:**
This circular, issued by SEBI on September 10, 2025, modifies the FPI Master Circular to ease regulatory compliance for Foreign Portfolio Investors (FPIs) investing solely in Government Securities (GSFPIs). The modifications pertain to investor group details, KYC requirements, change in information and transition mechanisms. The provisions of this circular will be effective from February 08, 2026.
**Key Points / Main Content:**
* **Investor Group Details:**
* GSFPIs investing under the Fully Accessible Route are exempt from furnishing investor group details.
* Restrictions related to investor group details shall not apply to GSFPIs, subject to conditions on resident Indian contributions via RBI's LRS route in global funds with less than 50% Indian exposure.
* **Registration and Information Updates:**
* GSFPIs renewing registration only need to pay fees to their DDPs; informing changes or providing declarations is not required.
* GSFPIs must inform all material changes (Type I and Type II) and provide supporting documents within 30 days of such change.
* **Transition Between Regular FPI and GSFPI:**
* New FPI applicants can declare themselves as GSFPIs during onboarding.
* Existing regular FPIs can transition to GSFPIs by declaring to their DDPs and divesting non-government securities holdings.
* DDPs and Depositories must ensure GSFPIs' demat accounts only hold government securities.
* GSFPIs transitioning to regular FPIs must provide additional information and documents applicable to regular FPIs.
* **KYC Requirements:**
* KYC review periodicity for GSFPIs will align with the KYC review periodicity of their respective bank accounts, as prescribed by RBI.
* **System Changes and SOP:**
* Depositories, Custodians, and DDPs must update their systems to accommodate these changes.
* CDSSF, in consultation with SEBI, will formulate a standard operating procedure (SOP) for implementing the provisions of this circular.
**Impact Analysis:**
* **Foreign Portfolio Investors (FPIs):**
* *Impact:* Reduced regulatory burden and simplified compliance procedures, particularly for those investing exclusively in Government Securities. New options for transition between regular FPI and GSFPI status.
* *Action Required:* Evaluate current FPI status and consider transitioning to GSFPI status if applicable. Comply with new requirements for GSFPIs regarding information updates and KYC.
* **Designated Depository Participants (DDPs):**
* *Impact:* New responsibilities related to onboarding GSFPIs, facilitating transitions between FPI categories, and ensuring compliance with demat account restrictions.
* *Action Required:* Update systems to accommodate GSFPIs, implement procedures for verifying compliance with investment restrictions, and adhere to the standard operating procedure (SOP) to be formulated by CDSSF.
* **Custodians:**
* *Impact:* Revised KYC review periodicity for GSFPIs, aligning it with RBI guidelines for bank accounts.
* *Action Required:* Adjust KYC review processes for GSFPIs accordingly and adhere to the standard operating procedure (SOP) to be formulated by CDSSF.
* **Depositories:**
* *Impact:* Need to work with DDPs to implement failsafe mechanisms for demat accounts used by GSFPIs.
* *Action Required:* Implement necessary system changes and collaborate with DDPs to ensure compliance with demat account restrictions.
Key Entities Referenced
Foreign Portfolio Investors: Entities investing in the Indian securities market from abroad.
Designated Depository Participants: Intermediaries handling the dematerialization and transfer of securities for FPIs.
Securities and Exchange Board of India: Regulatory body governing the securities market in India.
SEBI Foreign Portfolio Investors Regulations, 2019: Regulations governing the registration and operation of Foreign Portfolio Investors in India.
Government Securities: Debt instruments issued by the Government of India.
FPI Master Circular: A comprehensive circular issued by SEBI that provides guidelines for FPIs, DDPs, and Eligible Foreign Investors.
Reserve Bank of India: Central bank of India which regulates banking sector and manages foreign exchange.
Fully Accessible Route: A channel that allows foreign investors to invest in Indian government securities without any restrictions.
CIRCULAR
SEBI/HO/AFD/AFD-PoD-3/P/CIR/2025/127 September 10, 2025
To,
1. Foreign Portfolio Investors (FPIs)
2. Designated Depository Participants (DDPs) and Custodians
3. The Depositories
Dear Sir / Madam,
Subject: Ease of regulatory compliances for FPIs investing only in Government
Securities
1. SEBI vide “Master Circular for Foreign Portfolio Investors, Designated Depository
Participants and Eligible Foreign Investors” No. SEBI/HO/AFD/AFD-PoD-
2/P/CIR/P/2024/70 dated May 30, 2024 as amended from time to time (hereinafter
referred to as the ‘FPI Master Circular’), inter alia, specifies the guidelines for
registration of FPIs, KYC requirements and attendant investment conditions/
restrictions under Parts A, B and C of the FPI Master Circular respectively.
2. In order to facilitate ease of regulatory compliances for ‘FPIs investing only in
Government Securities’ (hereinafter referred to as “GS-FPIs”), SEBI (Foreign
Portfolio Investors) Regulations, 2019 were amended vide notification dated
August 11, 2025.
3. Accordingly, the FPI Master Circular stands modified as follows:
3.1. Under Para 1 of Part A, after sub-para “FPI applicant belonging to……with the
investor group ID.” and before sub-para “Where the application form…within a
reasonable time.”, the following sub-para shall be inserted:
“FPIs that invest exclusively in Government Securities under Fully
Accessible Route shall not be required to furnish investor group details.”
Page 1 of 43.2. Following sub-para shall be added after sub-para (ii)(d) of Para 1 of Part A:
“da. The provisions mentioned at a to c above shall not apply to ‘FPIs
investing only in Government Securities’ (hereinafter referred to as
“GS-FPIs”). However, they shall be subject to the provision that
contribution of resident Indian individuals shall be made through
the LRS notified by RBI and shall be in global funds whose Indian
exposure is less than 50%.”
3.3. Sub-paras (i) and (ii) of Para 4 of Part A shall be modified as under:
“i. FPIs who wish to continue with their registration for the
subsequent block of three years, should pay the fees to their DDPs
and inform change in information, if any, as submitted earlier.
However, GS-FPIs shall only pay the fees to their DDPs. The
requirement of informing any change in information shall not be
applicable to GS-FPIs.
ii. In case of no change in information, FPIs shall give declaration
that there is no change in the information, as previously furnished.
However, requirement of giving such declaration shall not be
applicable to GS-FPIs.”
3.4. Following sub-para shall be added after sub-para (i)(c) of Para 14 of Part A:
“(d) However, in case of GS-FPIs, all material changes (both Type I and
Type II) shall be informed and supporting documents (if any) shall
be provided by such FPIs as soon as possible and within 30 days
of such change.”
3.5. In order to facilitate a mechanism for transition between regular FPI and GS-
FPI, the following Para shall be added after Para 18 of Part A:
Page 2 of 4“19. Transition between regular FPI and GS-FPI:
i. New FPI applicants willing to invest only in Government Securities
may identify themselves as GS-FPIs by making appropriate
declaration to their DDPs at the time of on boarding.
ii. Further, regular FPIs (existing as well as prospective) may also
transition to GS-FPIs, by making appropriate declaration to their
DDPs.
iii. Upon receipt of such transition requests from FPIs, DDPs shall
ensure the FPI has divested all its holdings, except the securities
permitted for GS-FPIs, i.e., Government Securities. Further,
DDPs along with Depositories shall ensure that the FPI has either
closed its demat account or there are fail-safe mechanisms in
place to ensure assets other than Government Securities cannot
be held in such demat account of the FPI.
iv. Similarly, a GS-FPI may also transition to a regular FPI by making
appropriate declaration to their DDPs. For such transition, the GS-
FPI shall provide incremental information and submit documents
as are applicable to a regular FPI. From the date of transition
becoming effective, the FPI shall be required to comply with
regulatory requirements as applicable to a regular FPI.”
3.6. Following sub-para shall be added after sub-para (i) of Para 5 of Part B:
“ii. In case of GS-FPIs, periodicity of KYC review by custodians shall be
harmonized with the applicable periodicity of KYC review of their
respective bank accounts, as prescribed by RBI.”
4. Depositories, Custodians and Designated Depository Participants are advised to
make necessary changes in their systems to effect the changes proposed above.
Page 3 of 45. Custodians and Designated Depository Participants Standards Setting Forum
(CDSSF), in consultation with SEBI, shall formulate a standard operating
procedure for implementing the provisions of this Circular.
6. The provisions of this circular shall come into force with effect from February 08,
2026.
7. This Circular is issued in exercise of the powers conferred under Section 11(1) of
the Securities and Exchange Board of India Act, 1992 read with Regulations 4(c),
22(1), 22(3), 22(5) and 44 of SEBI (Foreign Portfolio Investors) Regulations, 2019
to protect the interest of investors in securities and to promote the development of,
and to regulate the securities market.
8. This Circular is available at www.sebi.gov.in under the link “Legal ---Circulars”.
Yours faithfully,
Manish Kumar Jha
Deputy General Manager
Tel No.: 022-26449219
E-mail: manishkj@sebi.gov.in
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