No plan to raise debt limit for foreign investors, says Khan

Reserve Bank of India (RBI) Deputy Governor H R Khan has denied plans to raise the debt limit for foreign investors.

Currently, the cap on foreign entities’ investment in government securities is $30 billion. In July, RBI had raised the investment limit for foreign institutional investors in government securities from $5 billion to $25 billion.

Khan said the central bank might conduct more bond buy-backs in the future. “We have some budget, and there is a suggestion that we can carry out up to Rs 50,000 crore of bond buy-backs. We have done Rs 20,000 crore, and this will be repeated, depending on the response,” he said. RBI was in discussions with the government to auction cash balances, he said, adding this could happen soon.

India, Khan said, wasn’t at risk from un-hedged forex exposure, as RBI had issued enough safeguards in this regard. “Due to a controlled regime for borrowing abroad, including a ceiling on the limit, we are not at risk, as other countries are. But quite a few corporates are exposed to foreign currency volatility and that is the reason we are making all efforts to encourage companies to hedge their exposure,” he added.