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Govt allows foreign investors to invest $1 billion in debt

The investment in corporate bond market will be increased to $21 billion from the current $20 billion

May 29, 2012 5:21 IST | India Infoline News Service
On 28th May, the Reserve Bank of India (RBI) has proposed to the finance ministry to reduce the minimum lock-in debt investment periods for foreign investors. The central bank has also proposed revising the investment limits in the country’s existing debt categories. However, these proposals have not been publicised yet and the finance ministry would make the final decision on these suggestions.
The proposals are intended to increase foreign inflows India and help support a rupee that has dropped to record lows against the dollar. According to analysts, shortening the lock-in periods of Indian debt holdings will make them more attractive for foreign investors.
India allows individual overseas investors to buy up to $20 billion in general corporate debt, $25 billion in infrastructure debt, and $15 billion in broader government debt. The investment in corporate bond market will be increased to $21 billion from the current $20 billion.

Thomas Mathew, joint secretary (capital market division) in the finance ministry said, it would take 6 to 18 months for the new capital flows into Indian debt to pick up.

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