RBI relaxes foreign transaction norms for buying government bonds

The Reserve Bank of India (RBI) Thursday said foreign investors can now buy government bonds in secondary markets from mutual funds, banks or other dealers.

The RBI, in a notification on "Purchase and sale of securities other than shares or convertible debentures of an Indian company by a person resident outside India", said foreign investors can buy government bonds through any "prevalent market practice".

"With a view to providing flexibility in regard to the manner in which government securities can be acquired by eligible investors, it has now been decided to remove any stipulation as to the manner of acquisition from the said regulations," the notification said.

"Consequently, the eligible investors can acquire such securities in any manner as per the prevalent market practice."

Earlier foreign investors had to buy the government bonds in the secondary market by going through exchange-registered brokers only.