Rajan sees wider foreign role in govt bonds, reports Euromoney

MUMBAI (Reuters) - 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 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.

(Reporting by Suvashree Dey Choudhury and Rafael Nam; Editing by Richard Borsuk)