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MARKET EYE-RBI worries about foreign surge into Indian T-bills
January 29, 2013 / 5:22 AM / 5 years ago

MARKET EYE-RBI worries about foreign surge into Indian T-bills

* RBI says most of the recent foreign fund investment into debt
has gone into treasury bills, providing little comfort towards a
sustainable path in bridging the current account deficit,
according to its macro-economic report on Monday.
* India's ratio of short-term debt on a residual maturity basis
to total debt rose to 43.7 percent as of the end of September
2012 versus 42.9 percent in the previous quarter, according to
the report.
* The comments are in line with the RBI's known discomfort about
using debt inflows to plug the current account deficit, even as
the government looks to boost more foreign investments. 
* India recently hiked the debt limit for foreigners in
government and corporate bonds by $5 billion each taking the
total limit for domestic debt to $75 billion. 
* "While the increased limit may enhance debt inflows, they do
not provide a solution to current account deficit financing on a
sustainable basis," says RBI's macro report.
* RBI has disallowed investment by foreigners in short-term
papers like t-bills for upto $15 billion of the FII limit in
government bonds, in a recent decision.


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