Allow foreign players in debt market, says survey
Tuesday, 28 July 2009, 14:29 IST
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New Delhi: The Reserve Bank of India (RBI) should allow participation of institutional players and foreign institutional investors (FIIs) in the country's debt market, said an industry survey released here Monday. According to the survey report, released a day before the apex bank is scheduled to announce its monetary policy for the current fiscal, 90 percent of the participants said the participation of FIIs in the debt market would help in its stabilisation. The survey, by Associated Chambers of Commerce and Industry (Assocham), was conducted among 335 chief executives representing banking, stocks, debt market, agriculture and small and medium enterprise sectors. "With FIIs involvement in the debt market, yields of debt instruments will grow higher to moderate existing interest tariffs and it will bring inflation to positive figures," it said. Assocham President Sajjan Jindal said the chamber did not expect any change in key rates -- cash reserve ratio, repo rate and reverse repo rate -- in the monetary policy even though the finance ministry has already announced its heavy borrowing plans. He added that the borrowing plans of the government should not be a reason for it to persuade RBI to further tinker with rates as it would affect the efforts to contain fiscal deficit. Under current circumstances those who posses debt instruments are not releasing them into the market because of limited yield. Reforms in debt market would help them release such commercial papers as their yield will increase, said Jindal. Although the industry is still struggling to come out of the meltdown, hopes have revived recently with core sectors posting good growth rates, the chamber said. Assocham added that RBI might upwardly revise its growth target of the gross domestic product (GDP) to close to 7 percent for current fiscal. The central bank had earlier projected 6 to 6.5 percent GDP growth for 2009-10.
Source: IANS
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