Jury is out on the impact of RBI's foreign portfolio investor measures

The decision to purchase bonds from the secondary market and heavy intervention to stem rupee loss should address the pressure faced by investors

As the short-term borrowing cost of companies spiked and foreign portfolio investors (FPIs) liquidated their bond holdings in India for greener pastures, the Reserve Bank of India (RBI) came out with various remedial measures.

In the first week of April, the central bank had increased the limit of foreign investment in Indian bonds to 6 per cent of the outstanding (in two phases till 2019-20), from 5 per cent now. By the end of April, it allowed foreign investors to invest in any maturity they wished to, from the earlier restriction of investing only in papers with a residual maturity