RBI expands FAR universe for FPIs to boost capital inflows

Key points

• Mumbai: The Reserve Bank of India (RBI) has thrown open a wider section of the government bond market to foreign investors, easing investment restrictions and expanding the pool of securities available under the fully accessible route (FAR) — a framework that allows foreign investors to buy designated government bonds — in a bid to revive overseas debt inflows, which experts said may support the government’s borrowing programme.
• The sweeping changes, announced on Friday, come at a time when foreign investment in Indian debt has slowed sharply amid a narrowing interest-rate differential with the US and heightened global uncertainty.
• Net foreign debt inflows slowed to just $0.5 million in the April-June quarter, compared with inflows of $2.8 billion in FY26 and $14.2 billion and $17.3 billion in FY24 and FY25, respectively, data from JM Financial Institutional Securities showed.
• Introduced in 2020, FAR was designed to facilitate greater foreign participation in India’s...