Foreign investment in govt bonds may be raised soon, says Raghuram Rajan

RBI Governor Raghuram Rajan said a ceiling on how much government debt foreigners can buy could be removed over the next two years and added that he wants to see the rupee as a global reserve currency in a decade, Euromoney reported in its web site.

Rajan told the magazine that the country would remove foreign investment limits "once the world becomes excited in a more substantial way about the India story".

That would happen once the economy reaches its potential output over two consecutive years and foreigners move to long-end maturities, Euromoney also reported Rajan as saying.

Foreign institutional investors (FIIs) have almost reached a $25 billion ceiling on their ownership of government bonds. Analysts expect the country will raise the limit, although a removal has not been expected in the near term.

Rajan also told Euromoney he would like to see the rupee as a truly global reserve currency in 10 years, a process that would likely involve allowing full convertibility for the currency.

Previously, Rajan has internationalising the rupee remains one of the central bank's long-term goals.

The International Finance Corporation, the World Bank's private sector arm, launched a maiden $1 billion offshore, rupee-linked bond programme last year to raise money for private infrastructure projects in India. The programme, completed in April this year, attracted strong demand.

(Reuters)