Source: Press Trust of India
The launching of a Indian rupee denominated bond by International Finance Corporation, a member of the World Bank group, is possibly the first step towards internationalization of the Indian currency, top Indian and IFC officals have said.
“This is for the first time that a Indian rupee denominated bond is being launched in the global market,” the Economic Secretary Arvind Mayaram told a group of Indian reporters yesterday after the IFC — a member of the World Bank Group — announced to launch a USD 1 billion offshore rupee bond program which he described as a key step towards “process of internationalisation of Indian rupee bond market.”
Mayaram said through this he expects that investors who have not yet come into India, to enter the Indian bond market.
“This would be one of the ways in which we can channelise global savings towards investing in India, especially the infrastructure sector,” Mayaram said yesterday.
Echoing Mayaram, Jingdong Hua, IFC vice president and treasurer described it as “internationalisation of rupee”, which he has have not heard this before.
“I as the IFC treasurer, looking at India, China and the US as the top three economies by 203, would like to offer Indian rupee as a currency of IFC as routine as US dollar,” he said.
The USD 1 billion offshore rupee bond program is largest of its kind in offshore rupee market.
Under the program IFC will issue rupee-linked bonds and use the proceeds to finance private sector investment in the country.
“It is a major development, as far as we are concerned in providing long term assured finance in several areas including infrastructure which is now looking for financing,” Mayaram said in response to a question.
The IFC, he said, is raising the bond and would be providing long term loans to projects approved by it.
Mayaram hoped that once this effort is successful in raising USD 1 billion in rupees through the international market, the IFC would follow it up with several other launches in the coming years.
“This is the first time that we are testing how global rupee bond issuance is accepted by the world. Once it is done, there is a possibility that other Indian finance companies, they could also possibly go into the global market to get finance.That is the future. We still need to see how the issuance of the bond is taken by the market,” he said.
“Even though we are going through a major global uncertainty at this point of time, and many emerging markets including India are facing challenges which have in some way got a shadow on the high growth trajectory they were witnessing, even the leader of the pack China has now witnessed slowdown. And it is a matter of concern,” he said.
“In my mind, I have no doubt at least for India, we have the resilience and the commitment to do whatever it takes which includes very policy reforms of opening of economy of providing the support that is required in increasing the confidence of the investors and in this regard we have recently taken major overhaul of foreign direct investment policy of India,” he added.