Raghuram Rajan sees 'wider foreign role' in govt bonds

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 on its web site.

Rajan told the magazine India 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 have almost reached a $25 billion ceiling on their ownership of government bonds. Analysts expect India 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 Corp, 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.