How NRIs Can Buy Government Bonds in India: FAR Route and Practical Process

NRIs often look for investment opportunities in India that provide stability, predictable income, and regulatory transparency. Government bonds are among the most trusted fixed-income instruments because they are backed by sovereign assurance. Many NRIs choose to invest in bond products such as Government Securities (G-Secs) since these instruments offer defined coupon payments, fixed maturity proceeds, and structured settlement mechanisms.

In recent years, regulatory changes have further simplified NRI access to government securities. The introduction of the Fully Accessible Route (FAR) has played a major role in expanding access to select government bonds without investment limits.

This article explains how NRIs can invest in government bonds, what FAR means, and what practical steps are required.

Understanding Government Bonds in India

Government bonds are issued by the Central Government or State Governments. These securities are typically issued with:

• fixed coupon rates

• periodic interest payouts

• maturity-linked repayment of principal

Since these bonds are sovereign-backed, they carry minimal credit risk. However, they are still exposed to interest rate risk, meaning bond prices may fluctuate if market interest rates rise or fall.

What is the Fully Accessible Route (FAR)?

The Fully Accessible Route is an RBI framework that allows eligible foreign investors, including NRIs, to invest in certain government securities without investment limits. FAR became effective from April 1, 2020.

Not all government securities qualify under FAR. Only designated securities are marked as eligible. Therefore, NRIs must verify FAR eligibility before investing.

Why FAR is Relevant for NRIs

FAR increases accessibility and encourages foreign participation in India’s bond market. For NRIs, it provides a structured entry into government securities with:

• fewer investment restrictions

• strong regulatory oversight

• predictable return framework

• potentially improved liquidity due to broader participation

This makes FAR-eligible G-Secs attractive for conservative allocation.

Practical Steps NRIs Must Complete

To invest in government bonds, NRIs require:

• NRE or NRO account

• PAN card

• completed KYC

• demat account

• trading account

Once these are in place, NRIs can access eligible government securities through approved platforms and execute purchases in electronic form.

Interest Payments and Maturity Proceeds

Government bond coupons are credited directly to the linked bank account. At maturity, the principal repayment is credited automatically. This structured payout mechanism improves transparency and reduces operational effort.

Secondary Market Liquidity

Government securities generally have better liquidity than corporate bonds. NRIs can sell these securities before maturity in the secondary market, depending on demand and prevailing market yields.

However, investors should note that price fluctuations can occur if interest rates change. Holding the bond until maturity reduces the impact of interim price volatility.

Government Bond Discovery

For NRIs, identifying FAR-eligible government bonds and comparing maturities can be difficult. Altifi simplifies this by presenting eligible fixed-income instruments with clear visibility into yield, tenure, and issuer classification. This structured access supports better bond comparison and informed selection for long-term allocation.

Conclusion

Government bonds provide NRIs a regulated and stable way to access India’s fixed-income markets. The Fully Accessible Route has further expanded access to select government securities without investment limits. With the right documentation and account setup, NRIs can explore eligible bonds, manage investments smoothly, and invest online with greater confidence and clarity.