Issuing sovereign bonds won't help India much: RBI

Governor Subbarao says the cost of a sovereign bond issue outweighs the benefits at current juncture

Reserve Bank of India Governor Duvvuri Subbarao said on Tuesday the central bank has reservations on issuing sovereign bonds.

A sovereign bond issue would compromise financial stability, and the cost of a sovereign bond issue outweighs the benefits at current juncture, Subbarao told reporters at the post-policy conference.

He also said that the central bank was as anxious as everyone else to roll back tight liquidity steps it had introduced earlier this month to prevent excess volatility in the foreign exchange market.

The central bank had tightened liquidity further and made it even harder for lenders to access funds with measures including lowering the amount banks can borrow or lend under its daily liquidity window.
 

Earlier in the day, the RBI held its key policy rates.