The RBI is not considering raising the foreign investment limit in government bonds immediately, Reserve Bank of India Deputy Governor H.R. Khan said on Thursday.
Speaking at a BFSI conference organised by SBI Capial Markets, Khan said: “Right now there is no such discussion.” He said this when asked if the FII limit in government bonds would be raised.
At present, India allows FII investment of up to $30 billion in government bonds, including $20 billion for all and $10 billion for specific investors like foreign central banks, sovereign wealth funds, pension funds and insurance funds.
As per agency reports, the limit under $20 billion has been fully exhausted following an auction of the residual Rs 7,152 crore on Wednesday.
The central bank is also in discussions with the government to improve the product features of inflation-indexed bonds that had failed last year, possibly due to wrong timing, and may now consider quarterly interest payouts, Khan said.
Payment banks
In addition, Khan also said that the country will soon have its first payment bank as prescribed by a committee headed by Nachiket Mor to look into financial inclusion.
”I know that many are disappointed that RBI has issued only two universal bank licences. But we will soon be coming out with new guidelines and the licensing will not be a window where everyone will have to rush at the same time,” Khan said.
"We will shortly be coming out with a payment bank which has been recommended by the Nachiket Mor committee…will also put out framework for differentiated bank licensing soon, he added.
Besides guidelines for a universal bank, Khan also said that the RBI will have separate norms for small private sector banks along with mid-sized commercial banks.