RBI reassures investors amid bond restrictions

The Reserve Bank of India (RBI) has moved to allay concerns over recent restrictions imposed on foreign ownership of Indian government bonds.

Deputy Governor Michael Patra stated on Thursday that the measures were not as severe as perceived.

India currently offers a total of 41 trillion rupees ($488 billion) worth of bonds to foreign investors, with only two trillion rupees currently held by overseas entities. Patra emphasised that there is ample room for foreign investment in Indian bonds.

Last week, the central bank surprised investors by announcing that overseas funds will no longer have full access to newly issued Indian government bonds with 14-year and 30-year tenors.

This decision followed JPMorgan Chase & Co.’s recent inclusion of Indian government securities in its main emerging-market index.

Attribution: Bloomberg