VTB, one of Russia’s leading state-owned banks, has been granted the status of a Foreign Portfolio Investor (FPI) in India, a significant milestone that opens new investment avenues for the bank in one of the world’s fastest-growing economies. This development was reported by Kommersant, a major Russian business publication. The FPI status, which has been awarded to VTB under a Category I licence, allows the bank to engage in low-risk investment activities within the Indian stock market.

The licence is valid until July 15, 2027, and positions VTB among a select group of Russian banks, including Sberbank, T-Bank, and CentroCredit Bank, which have already secured similar access to India’s financial markets. With this new status, VTB can directly purchase Indian securities and, potentially, offer exchange structured bonds based on these assets. However, the bank’s ability to provide these investment products to large institutional clients remains contingent on additional licensing for specialised depositories.

“India’s stock market presents a compelling opportunity for diversification,” noted a source from a leading management company. The market’s capitalization surpassed $5 trillion in June 2024, with the Indian economy exhibiting strong growth—a reported 8.2% GDP increase by the end of 2023. These factors, combined with India’s stable macroeconomic environment and lack of geopolitical tensions, make the country an attractive destination for foreign investment. However, experts also caution about potential risks, including investment limits, capital repatriation challenges, and infrastructure issues. Additionally, the spectre of secondary sanctions remains a concern for investors operating in global markets.

VTB has been strategically expanding its operations in India, which include a branch office and plans to facilitate transactions in Indian rupees. The bank first announced its intention to seek FPI status in October 2023, signalling its long-term commitment to the Indian market. The inclusion of Indian sovereign bonds in the JP Morgan GBI-EM Global Series Index, a major benchmark for emerging market bonds, further underscores the growing global interest in India.

The addition of 28 government bonds, valued at over $400 billion, is expected to give India a 10% share in the global index, reflecting the country’s rising prominence on the world stage. This press release reflects the strategic move by VTB to enhance its global portfolio by tapping into the Indian financial market, leveraging its FPI status to build a diverse investment portfolio in an economy with robust growth potential.