Mumbai: India needs to proceed cautiously in fully opening up its debt markets to foreign investors, given the need to first tackle issues such as the large government borrowing and capital controls, executive director G. Padmanabhan said in a speech last week.
Mr Padmanabhan also raised concerns over the unhedged foreign currency exposure by Indian borrowers in offshore debt, saying it raised "systemic concerns."
The executive director, whose last day at the RBI is at the end of May, spoke at an Indian foreign exchange dealers' association meeting on Friday. The speech was uploaded on Monday.
Mr Padmanabhan cited "structural frictions" in India's bond and currency markets, including large government borrowings, as reasons that justified proceeding "in a non-disruptive manner" on removing debt limits for foreign investors.
Foreign investors can now buy up to $30 billion of government bonds and $50 billion of corporate bonds.
© Thomson Reuters 2015
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