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Funds may think twice on India as government-RBI strife deepens

The rupee declined 0.1 per cent to 72.03 per dollar on Monday after strengthening 0.8 per cent last week. India's benchmark 10-year bond yield climbed one basis point to 7.83 per cent

Kartik Goyal | Bloomberg 

RBI
A Reserve Bank of India (RBI) logo is seen at the gate of its office in New Delhi. Photo: Reuters

India’s and may come under pressure on concern the government’s attempts to restrict central bank’s freedom of action will unnerve overseas

Prime Minister Narendra Modi’s administration is believed to be seeking closer supervision of the Reserve Bank of India by recommending the board draft regulations allowing the establishment of panels overseeing such functions as financial stability, transmission and management of reserves.

“Any moves by the government that would undermine the independence of the would make us think twice about re-entering the Indian bond market,” said Anders Faergemann, a fund manager in London at PineBridge Investments, which oversees about $91 billion. “Strong institutions are critical for any country and to attract foreign capital the central bank will have to remain independent.”

India’s monetary policymakers and government officials are holding a board meeting Monday amid a struggle over how much capital the central bank needs and how tough its lending rules should be.

The declined 0.1 percent to 72.03 per dollar on Monday after strengthening 0.8 per cent last week. India’s benchmark 10-year bond yield climbed one basis point to 7.83 per cent.

First Published: Mon, November 19 2018. 12:32 IST
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