MUMBAI: The Reserve Bank of India (RBI) said it is withdrawing a restriction that limited foreign investors to only investing in government and corporate bonds with tenures of three years or more, a move that could bolster the domestic bond market.
The decision by the RBI, announced late on Friday, came close on the heels of weak investor interest in two recent auctions that led to a spike in sovereign debt yields.
At Thursday's auction of a 7.37 percent 2023 bond, the Reserve Bank of India was only able to sell about 430 million rupees out of the 30 billion on offer into the market, with the remainder having to be bought by primary dealers.