The Cabinet will today take up the proposal to allow the Reserve Bank of India to invest in bonds floated by the International Bank for Reconstruction and Development (IBRD), a lending arm of the World Bank, said the media report.
"The RBI will subscribe to the bonds of the IBRD...This is an investment proposal, which means they will get a return on it. So it is not equity or a grant," a top finance ministry official told reporters. India's headroom for borrowing from the World Bank is reaching the limit and investing in these bonds will widen the scope for more loans, the official said.
"Total lending by the World Bank is coming down. By subscribing to these bonds, India will be able the leverage this to get larger sums of money as loans for investment in infrastructure projects. So it provides for long-term infrastructure financing in the country," the official said.
The bonds would be of various tenures, he said, adding that the RBI can invest in certain types of institutions, including the World Bank.
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