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

The world's third-largest state-run pension fund, South Korea's National Pension Service (NPS), is seeking permission to invest in Indian government securities under a less stringent regulatory route, according to two sources familiar with the matter. India aims to attract more foreign capital into government bonds through relaxed registration, lower taxes, and inclusion in global bond indices.

With the Indian rupee near historic lows against the U.S. dollar, foreign investors have reduced equity investments in the country, prompting a focus on bonds. The NPS, with over $1.3 trillion in assets, will be among the first foreign investors to utilize SEBI's lower compliance window for investing exclusively in government bonds.

This route requires less frequent documentation submission every ten years instead of the previous three-year cycle, and does not need to disclose end-investor details. Currently, foreign holdings of government bonds total nearly 4 trillion rupees, with pension funds holding a relatively small 469 billion rupees in Indian debt.