Business & Economy Current Affairs 2017

Latest Business & Indian Economy Current Affairs 2017 for UPSC Exams, Bank Exams, Civil Services, SSC and other Competitive Exams. Latest developments in Business and Finance Industry of India and world 2017 all important national updates in Banks and events for the year 2017.

RBI takes masala bonds out of corporate bond limit for FPIs

The Reserve Bank of India (RBI) has increased corporate bond investment limit for foreign investors by taking out Masala bonds (rupee-denominated bonds) from ambit of total debt investment limit. They will be considered as part of External Commercial Borrowings (ECBs) and will be monitored accordingly.

Key Facts

Currently, masala bonds are reckoned both under combined corporate debt limit (CCDL) for FPI (Foreign Portfolio Investments) and external commercial borrowings (ECBs). At present, limit for investment by FPIs in corporate bonds is Rs. 2,44,323 crore. It includes issuance of rupee-denominated bonds (RDBs) overseas by resident entities of Rs 44,001 crore (including pipeline). The amount of Rs 44,001 crore arising from shifting of Masala bonds will be released for FPI investment in corporate bonds over the next two quarters.

Background

With surge in inflows in Indian debt markets in current year, cumulative utilisation of FPI limit in corporate bonds stood at 99.07% as on September 2017, reflecting limited scope of further FPI investments. The revised limit is expected to allow FPIs to make additional investments of a similar amount in corporate bonds.

Masala bonds

The Masala bonds refer to rupee-denominated bonds through which Indian entities can raise money from foreign markets in rupee, and not in foreign currency. Basically, they are debt instruments used by corporates to raise money from investors. The issuance of rupee denominated bonds, protects Indian entity against risk of currency fluctuation, typically associated with borrowing in foreign currency. It also helps in internationalization of the rupee and in expansion of t Indian bond markets. These bonds are usually traded on the London Stock Exchange (LSE) and not in India.

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FTSE SBI Bond Index: India’s first bond index series launched by SBI

State Bank of India (SBI) along with FTSE Russell, global index and data provider launched FTSE SBI Bond Index series at London Stock Exchange (LSE). It is India’s first bond index series for overseas investors.

It launch follows November 2015 visit of Prime Minister Narendra Modi in UK when letter of intent was signed between SBI and FTSE to jointly develop new index tracking Indian fixed income securities.

FTSE SBI Bond Index Series

FTSE SBI Bond Index is positioned as first-of-its-kind transparent and reliable benchmark for investors in international markets to analyse India’s government bond market. It will significantly contribute to development and broadening of Indian bond market. It demonstrates SBI’s commitment to play befitting leadership role in development of India’s bond market.

Background

Indian government bond market is worth around $1.7 trillion. Prior to launch of FTSE SBI Bond Index, the bond market was not having any reliable international indices on which international investors can invest in the country. Investors are eager to invest in India, but lacked enough depth in terms of the various types of bond products.

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