RBI governor says no worries on heavy inflows from global bond inclusion

Shaktikanta Das1

The Reserve Bank of India (RBI) Governor Shaktikanta Das on June 7 said there is no worries on expected heavy inflows from global bond inclusion, which is expected by the end of this month.

"Teh RBI has a number of instrumentalities ,we have managed it in the past, we will manage it this time also. No worries on that," Das said during a post policy media conference.

JPMorgan Chase & Co will add Indian government bonds to its benchmark emerging-market index, a keenly awaited event that could drive billions of foreign inflows to the nation’s debt market.

The index provider will add the securities to the JPMorgan Government Bond Index-Emerging Markets starting June 28, 2024.

On May 21, Moneycontrol reported that according to a senior finance ministry official, concerns over “hot money” are not immediate given that the amount invested by foreign investors under the fully accessible route so far is not too large.

As per Clearing Corporation of India (CCI) data, investments under the FAR route stood at Rs 1.74 lakh crore as on June 7. FAR or Fully Accessible Route was introduced by the Reserve Bank of India in April 2020, allowing non-residents to invest in specified government bonds without any restrictions.

"The bond market is not a market where you can dump and go. You typically have long-term investors in this market. Though the FAR route has no limits when it comes to FPIs, total investments by foreign investors has not even reached 6 percent, which is the ceiling for government securities overall," this official said.

The official is referring to the investment limit on FPIs in government securities overall of 6 percent sans the FAR route .