SEOUL, Sept 30 (Reuters) - FTSE Russell said it may add South Korea to its world bond index following moves by authorities in Seoul to improve market access to overseas investors, paving the way for a potentially huge boost in capital inflows to the country.

Welcoming the announcement, South Korea's finance ministry on Friday cited independent research estimates that an inclusion in the FTSE World Government Bond Index could help boost its local bond market by as much as 90 trillion won ($63 billion), although it did not specify a timeframe.

It added that South Korea would likely have a 2.0-2.5% weighting in the index, the ninth-biggest of 24 constituting countries if included.

"We expect actual inclusion to boost global demand for South Korean government bonds in a stable manner and therefore contribute to strengthening stability in bond and foreign exchange markets," the ministry said in a statement.

It expects FTSE Russell, a global index provider owned by London Stock Exchange Group, to make a final decision in September next year.

The local bond market also cheered the announcement with South Korean three-year treasury bond futures rising as much as 0.38 point, despite a sell-off in U.S. treasuries overnight.

"It is a big deal," said an official at the Seoul branch of a foreign bank, though he added that any impact on the local market this year could be limited as investors were mostly focused on interest rate moves by the U.S Federal Reserve.

Seeking South Korea's inclusion in the index, the finance ministry has proposed a bill that would remove a tax on foreign investment in its bond market, which is now being reviewed by the National Assembly for final approval.

The ministry has also said it is preparing to allow bond market transactions via international central securities depositories, such as Euroclear and Clearstream, for improved foreign investor convenience. ($1 = 1,428.1 won) (Reporting by Jihoon Lee and Choonsik Yoo, additional reporting by Seunggyu Lim; Editing by Edwina Gibbs)