FII limit in G-secs to be revised twice a year: Rajan

The RBI will push the idea of a new kind of NBFCs which would act as account aggregators. These NBFCs would create a common platform for customers to see and operate all their financial assets such as bank accounts, stocks, bonds, insurance, pension and mutual funds.

The RBI is still working out ways and means to facilitate creation of an account aggregation platform. “Plans are underway,” said Governor Raghuram Rajan.

Talking to media persons after the RBI’s board meeting here, Rajan said the regulator will also resurrect the Financial Inclusion Advisory Committee with participation from various experts. The committee has been put on hold now as the Pradhan Mantri Jan-Dhan Yojana is in progress, he said. An internal group in RBI would also be constituted for the purpose.

On FII investment limit in government bonds, he said the central bank is committed to steady expansion in the absolute value of investments by FIIs. History suggests that those limits should never be reduced. The RBI has decided to revise the ceiling twice a year regularly, and “efforts are being made to make such investment easier. We just have to fix the dates with SEBI to fix those limits. Then we will examine twice a year,” he said.

Currently, the investment limit for government securities (G-secs) by FIIs is $30 billion annually. Of this FIIs are allowed to invest $25 billion, whereas $5 billion is for long-term investors.

The RBI is keen to attract more overseas funds to keep the value of the domestic currency in comfort zone.

At the same time, the RBI would also ensure that we don’t go overboard and become overly reliant on FII investments in the government bond market or corporate bond market, Rajan said.

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