"The Reserve Bank is examining all the pros and cons of this and they will come back with the recommendations," Economic Affairs Secretary Arvind Mayaram told reporters here. To join the globally tracked JPMorgan Government Bond Index - Emerging Markets, India will have to relax foreign institutional investment (FII) limit in its government securities (G-secs).
The present limits for investments by FIIs, qualified foreign investors and long-term investors registered with Sebi in the country's G-secs is $30 billion. Mayaram also said that the first overseas rupee bond was being issued by the International Finance Corporation (IFC), a private sector lending arm of World Bank.
"We want to see what is the experience from that. Once that experience is gained...It (IFC bond issue) is a case for experiencing how rupee bond overseas develops," he said.
The $1 billion offshore rupee bond programme is largest of its kind in the offshore rupee market. Under the programme, IFC will issue rupee-linked bonds and use the proceeds to finance private sector investment in the country.
Mayaram said whether Indian companies should be allowed to float overseas rupee-dominated bonds will depend on the experience of the IFC bond. "But certainly we have very much under consideration the request of the Indian government to float bonds overseas," he said.