Foreigners can buy more G-Secs

Hyderabad: Signalling its confidence in the Indian economy, the RBI on Tuesday said that it will allow foreign investors to buy an additional $18.2 billion in government bonds in stages over the next few years.

This will hike the limits for FPI investment in government securities (G-sec) to five per cent of the outstanding stock by March 2018 and will bring an additional Rs 1.2 lakh crore ($18.19 billion) investment into the country.

Dr Rajan also said that foreign investors would also be allowed to buy bonds issued by Indian states for the first time. This will bring in Rs 50,000 crore debt by March 2018. India has been conservative in opening up the government debt market to highly volatile foreign players, whose moves could directly affect the government’s finances in  adverse circumstances.

“These measures signal the RBI’s rising confidence in the resilience of India’s capital markets. India, particularly versus other EMs (emerging markets), has seen stable capital flows supported by FDI (foreign direct investment) and bond buying,” said Leong Lin Jing, an investment manager at Aberdeen Asset Manage-ment in Singapore in emailed comments.