Not worried over inflows from global bond inclusion: RBI

MUMBAI: The Reserve Bank Governor Shaktikanta Das said on Friday that he does not see any problems arising from the likely heavy inflows from the inclusion of bond into the global indices. The first bond inclusion by JP Morgan is expected by the end of the month and the next from January by Bloomberg.

“The RBI has a number of instrumentalities, and we have managed it in the past, and we will manage it this time also. No worries on that (expected foreign fund flows from the bond inclusion),” the governor told reporters at the customary post-policy media conference on Friday.

While Wall Street major JPMorgan Chase will add government bonds to its benchmark emerging-market index from later this month, Bloomberg will do so from January. The JP Morgan inclusion alone is expected to bring in at least $25 billion into the country.

The index provider will add the securities to the JPMorgan government bond index-emerging markets index starting June 28.

A section in the finance ministry are reportedly a bit concerned as they think this could be ‘hot money’ while, according to the RBI, the amount invested by foreign investors under the fully accessible route (FAR) so far is not too large.

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

The investment limit on foreign portfolio investors (FPIs) in government securities overall is 6%, sans the FAR route.

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