India plans to reduce paperwork for foreign bond investors amid JPMorgan index inclusion: Report

Sebi and RBI are working together to make paperwork easier for foreign bond investors as India gets included in JPMorgan's emerging market bond index.

India is working on reducing the paperwork required for foreign investors to buy India’s sovereign bonds, Bloomberg reported, citing an unnamed source. This comes after a Bloomberg report depicted how foreign investors find it difficult to invest in India due to the heavy paperwork involved.

India's inclusion in JPMorgan’s emerging market bond index is projected to bring inflows of $20 to $25 billion over the next 10 months.

Why is the government making paperwork easier for foreign bond investors?

This also comes as India gets included on JPMorgan’s emerging market bond index on Friday, leading to a projected inflow of $20 billion to $25 billion over the next 10 months, as estimated by JPMorgan. Investors worldwide have already invested close to $11 billion in Indian bonds that are eligible to be included in the index.

Foreign investors have been favouring India’s bonds as they have been Asia’s top performing ones, giving returns of 5.3%, compared to Indonesia’s 1.3% for example.

The Securities and Exchange Board of India (Sebi) is discussing with the Reserve Bank of India (RBI) to make the paperwork easier.

How is the government making paperwork easier for foreign bond investors?

The common application form currently requires the RBI’s know-your-customer (KYC) checks to open a bank account, Sebi documentation to open a depository account, and enrollment with the tax department, according to the report.

Sebi wants to eliminate many of its information requirements like disclosure of investor group and beneficial ownership, with information required by the RBI and revenue departments remaining unchanged, the report read.

Sebi and RBI had first discussed easing the rules in May and the discussions are ongoing. A timeline is uncertain because changing the registration forms needs a notification from the central government, according to the report.