India to keep door open for foreign bond investments – Reuters

India has no immediate plans to reimpose foreign investor limits on new issuances of 5-year, 7-year, and 10-year government bonds, a government source confirmed on Wednesday.

This decision comes after the Reserve Bank of India (RBI) recently restricted foreign portfolio investors (FPIs) from accessing new 14-year and 30-year government bonds under the fully accessible route (FAR).

Global fund managers criticised India’s policy reversal on restrictions for purchasing government securities, calling it inconsistent and likely to prompt a reassessment of investment strategies by foreign investors.

“One objective of excluding 14-year and 30-year securities is to focus FPI demand in securities up to 10 years and thereby improve liquidity in this segment,” the source said on condition of anonymity as the discussions are not public.

Foreign investors can still purchase 14-year and 30-year bonds through the secondary market, subject to an overall limit of six per cent of outstanding stock accessible to foreigners. However, current usage of this limit is relatively low.

Attribution: Reuters