India eases paperwork for foreign bond investors amid inclusion in JPMorgan’s emerging market bond index

India is taking steps to reduce the paperwork required for foreign investors to purchase its sovereign bonds, according to a Bloomberg report citing an unnamed source. This move follows a Bloomberg report highlighting foreign investors' challenges due to the extensive paperwork involved.

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This initiative coincides with India’s inclusion in JPMorgan’s emerging market bond index on Friday. As estimated by JPMorgan, this inclusion is anticipated to attract an inflow of $20 billion to $25 billion over the next ten months. So far, global investors have invested nearly $11 billion in Indian bonds eligible for this index. The appeal of India’s bonds is evident as they have been Asia’s top performers, yielding returns of 5.3%, compared to Indonesia’s 1.3 per cent.

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The Securities and Exchange Board of India (Sebi) collaborates with the Reserve Bank of India (RBI) to streamline the paperwork process.

Simplification process explained

The common application form currently involves several steps: 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. Sebi aims to eliminate many of its information requirements, such as disclosure of investor groups and beneficial ownership, while retaining the information required by the RBI and revenue departments.

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Sebi and RBI initiated discussions to ease these rules in May, and the talks are ongoing. The timeline remains uncertain as changes to the registration forms require a notification from the central government.