In a bid to breathe fresh life into the corporate bond market, the Reserve Bank of India may consider relaxing the norm which prevents foreign investors from investing in bonds of less than three-year residual maturity.

In February 2015, the RBI had issued a notification stating that all future investments by foreign portfolio investors, within the limit for investment in corporate bonds, will be required to be made in corporate bonds with a minimum residual maturity of three years.

Further, all future investments against the limits vacated when the current investment runs out either through sale or redemption, will be required to be made in corporate bonds with a minimum residual maturity of three years.

Speaking at a capital market summit, hosted by industry body FICCI, HR Khan, Deputy Governor, said the central bank will examine the areas where the norm can be relaxed. However, he added that no view had yet been taken on the issue.

While emphasising that the country needs foreign investments, Khan said, “We are not desperate that we open our floodgates to hot money. But certainly we will see that there is vibrancy (in the bond market)."

The Deputy Governor said the RBI has laid down a framework for Government securities for the next two-and-a-half years and there is no urgency to include the securities in the global bond index. “Right now there is no pressing need for India to open up too fast, too much and then get into problems. Every now and then you worry what happens in Washington and what happens in Beijing. I think we have to tread cautiously,” he said.

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