The Reserve Bank of India (RBI) is against the finance ministry's proposal of creating a separate limit of USD 10 billion for qualified foreign investors (QFIs) investments in corporate bonds, reports CNBC-TV18.
RBI sources told CNBC-TV18 that the central bank feels enhancing any limit would add to the strain of short-term debt. However, the finance ministry is keen to implement the 2012 budget proposal of allowing QFI investments in corporate bonds and has now mooted a USD 2 billion proposal.
Sources say the finance ministry has given RBI two options: raise the corporate bond limit by USD 1 billion to USD 21 billion, out of which USD 19 billion would be earmarked for FIIs and USD 2 billion for QFIs.
The second option is to carve out USD 2 billion for QFIs from the existing USD 25 billion FII limit for long-term infra bonds.
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