RBI seeks feedback on settling Indian bonds via Euroclear
RBI) has been making informal inquiries with select bond market participants about the impact of allowing settlement of domestic sovereign debt on the Euroclear platform, a move that experts believe would help expand the overseas investor base for local debt and eventually lower borrowing costs through inclusion of these bonds in globally tracked indices.
«They (the RBI) are not averse to the process of settlement of Indian bonds on the Euroclear platform and have been taking feedback from the market,» a source aware of the development said. «Such discussions happened earlier too — there were some concerns over a parallel yield curve developing, although the market has developed more now and is much deeper.»
In most cases, bonds listed on an international index are settled on global platforms such as those offered by the Belgium-based Euroclear.
Although Euroclear settlements are not mandatory for inclusion of Indian sovereign debt on global bond indices such as those offered by JP Morgan and Bloomberg Barclays, the presence of a settlement mechanism on a global platform is seen to help push the cause for inclusion.
'Tax Relief Unlikely'
A Reuters report, citing Bank of America Securities, said last month that index inclusion could lead to inflows of $6 to $12 billion over a period of time into India, thereby helping lower yields on sovereign debt.
