Lock-in for infra bonds may be cut to 1yr from 5yrs

CNBC-TV18 learns that the finance ministry is now stepping up efforts to fight the rupee depreciation. Sources indicate the ministry is looking to reduce the lock-in period for infrastructure bonds to one year from the current five years. Aakanksha Sethi has the exclusive report.

Currently, FIIs can invest up to USD 25 billion in infrastructure bonds in the country. Of this, for the USD 17 billion basket, the finance ministry is considering reducing the lock-in period from five years to one year. They believe that this is a key deterrent in FII flows into infrastructure bonds, she reports.
This coupled with the earlier raise in limit for FII investment in sovereign debt and corporate bonds, the ministry is hoping that it will help check rupee depreciation and the widening current account deficit. This announcement is expected by the end of this month and the Finance Ministry hopes that this money will come in by January 30.