RBI mulling pros & cons of Indian bonds joining global indices

NEW DELHI: Finance Ministry today said the Reserve Bank is looking into the feasibility of joining global indices for bonds with a view to attract foreign funds.

"The Reserve Bank is examining all the pros and cons of this and they will come back with the recommendations," Economic Affairs Secretary Arvind Mayaram told reporters here.

To join globally tracked JP Morgan Government Bond Index - Emerging Markets, India will have to relax FII limit in its G-Secs.

The present limits for investments by FIIs, QFIs and long term investors registered with SEBI in India's Government securities is $30 billion.

Mayaram further said that the first overseas rupee bond is being issued by the International Finance Corporation (IFC), a private sector lending arm of World Bank.

"We want to see what is the experience from that. Once that experience is gained...It (IFC bond issue) is a case for experiencing how rupee bond overseas develops," he said.

The $1 billion offshore rupee bond program is largest of its kind in offshore rupee market. Under the program IFC will issue rupee-linked bonds and use the proceeds to finance private sector investment in the country.

Mayaram said if Indian companies should be allowed to float overseas rupee dominated bonds will depend on the experience of IFC bond.

"...but certainly we have very much under consideration the request of Indian government to float bonds overseas," he said.