India considering allowing banks to buy infrastructure bonds: RBI

Highlights:  

  • Country's apex bank, the Reserve Bank of India is considering allowing banks to buy infrastructure bonds.
  • The main is to jumpstart a market that has suffered from low trading volumes after launching last year with knowledge of the central bank's thinking.
  • The RBI allows banks to buy infrastructure bonds would mark a reversal for the central bank, which last year allowed lenders to only issue the debt, while limiting purchases to investors such as pension funds, provident funds, and insurers.
  • That limitation has backfired, according to bankers, severely crimping trading volumes in the market since lenders are the biggest buyers and traders in debt markets.