RBI says no immediate plans to raise FIIs' debt limit

The Reserve Bank today ruled out any immediate plan to increase the investment limit for overseas investors in government securities from the current USD 30 billion.
"As of now there is no such (raising FII debt limit) proposal, but we will see," RBI Deputy Governor HR Khan told reporters on the sidelines of an annual banking event, organised by Ficci and IBA here.
It may be noted that the Reserve Bank of India (RBI) had in July increased the investment cap for FIIs in government securities by USD 5 billion to USD 25 billion, within the total limit of USD 30 billion.

The limit was enhanced by reducing the investment limit for long-term investors from USD 10 billion to USD 5 billion.
The government has budgeted Gilt buyback worth Rs 50,000 crore for this year. And the first tranche of Rs 20,000 crore was auctioned today, but the RBI accepted bids worth only Rs 12,761.46 crore.
When asked when would RBI buy back the rest of government securities which was announced during the Budget, Khan said a decision on this will be taken later.

"We have done (repurchase of government securities) worth Rs 20,000 but the entire amount was not accepted. This tranche may again repeat depending on how things move," Khan said.

He also said the central bank is in dialogue with the government on auctioning of cash balances and it would happen soon.
Whether the RBI is concerned over more and more domestic companies borrowing money from abroad, Khan answered in the negative, saying the country is not at risk as RBI has issued enough safeguards to avoid any major risks emanating from unhedged forex exposure .
"Due to controlled regime for borrowing abroad such as ceiling on limit, we are not at risk as other countries are. But still there are quite a few corporates who are exposed to foreign currency volatility and that is the reason we are making all the efforts to encourage companies to hedge their exposure," he added.