South Korean pension fund seeks India government bond investment licence, sources say

Read a summary of this article on FAST.
Get bite-sized news via a new
cards interface. Give it a try.
Click here to return to FAST Tap here to return to FAST
FAST

MUMBAI, Sept 22 : South Korea's state-run pension fund, the world's third-largest, is seeking a licence to invest in Indian government securities under a compliance-light route offered by the market regulator, two sources with direct knowledge of the matter said.

India has been trying to draw more foreign capital into government bonds through easier registration, lower taxes and by targeting entry into global bond indices.

The drive to deepen foreign participation in India's debt market is part of efforts to diversify funding sources and attract more stable capital inflows, with the rupee trading near historic lows against the U.S. dollar.

While equities have typically dominated foreign portfolio flows in India, investors have sold nearly $45 billion in equity investments between 2025 and 2026 so far, prompting greater focus on drawing bond investments.

CNA Games

Guess Word
Crack the word, one row at a time

Buzzword
Create words using the given letters

Mini Sudoku
Tiny puzzle, mighty brain teaser

Mini Crossword
Small grid, big challenge

Word Search
Spot as many words as you can
Show More
Show Less

Foreign investors have invested $14 billion in government bonds over last year and this year.

India's benchmark 10-year sovereign bond yields are about 7 per cent, while shorter-dated Treasury bills yield roughly 5.30 per cent-6 per cent, levels that compare favourably with many developed-market government securities.

Korea's National Pension Service, which has more than $1.3 trillion in assets, will be one of the first to apply under the Securities and Exchange Board of India (SEBI) lower compliance window for foreigner investors investing only in government bonds, the sources said.

The sources declined to be identified as discussions around investing are private.

Email queries sent to South Korea's pension fund and SEBI were not answered.

The lower compliance window was opened to make the investment process easier for pension and sovereign wealth funds, which tend to prefer investing in Indian government bonds, the first of the two sources said.

"Higher interest and queries are coming from these category of investors. South Korea's pension fund is in the advanced stages, making it among the first large global pension fund to use the route," the source added.

Under the new route, low risk investors such as sovereign wealth funds and pension funds need to submit documentation only every 10 years compared to the earlier requirement of three years. These funds do not have to furnish their end-investor details as required for equity and corporate bond investors.

Unlike several major markets where overseas investors can access government bonds with limited upfront registration requirements, India requires investors to obtain registration and submit documentation establishing their identity and eligibility.

While South Korea's National Pension Service (NPS) invests in Indian securities via 33 offshore funds managed by different fund managers, much of this is in equities.

This would be NPS' first dedicated government-securities only investment vehicle in India, creating a separate channel for a larger allocation to sovereign bonds, the second source said.

Foreign holdings of government bonds are close to 4 trillion rupees ($41.75 billion), according to clearing corporation data.

Pension funds hold a relatively small 469 billion rupees in Indian debt, separate data from the National Securities Depository shows. Much of the foreign investment in Indian sovereign debt is concentrated in longer-dated benchmark government securities, rather than short-term debt instruments.

($1 = 1,381.2600 won)

($1 = 95.8100 Indian rupees)

Newsletter

Week in Review

Subscribe to our Chief Editor’s Week in Review

Our chief editor shares analysis and picks of the week's biggest news every Saturday.

Sign up for our newsletters

Get our pick of top stories and thought-provoking articles in your inbox

Subscribe here

Get the CNA app

Stay updated with notifications for breaking news and our best stories

Download here

Get WhatsApp alerts

Join our channel for the top reads for the day on your preferred chat app

Join here