India keen to settle sovereign bonds domestically to help with CAD

JPMorgan, this week, has sought views from the investors on whether it should include India's sovereign bonds in its GBI-EM Global Diversified Bond Index or not

Rupee, bonds market, funds
BS Web Team New Delhi
2 min read Last Updated : Sep 02 2022 | 3:30 PM IST
Indian sovereign bonds may soon be settled domestically. This will be possible if the bonds are included in global bond indices and are traded overseas. According to a report by Economic Times (ET), the government is looking for ways to make this possible. 

"Discussions are on (on the inclusion) with them... We are looking at (whether) the settlement can be facilitated here," an official told ET.

This would also do away with the need to reform the taxation system in the country. JPMorgan, this week, sought views from investors on whether it should include India's sovereign bonds in its GBI-EM Global Diversified Bond Index or not. If the move is successful, it is expected to bring a large pool of liquidity into the Indian sovereign bond market.

This would also improve India's current account deficit. According to the report, India may see the highest CAD in the last 10 years, in FY23. It might come to around $300 billion. 

Usually, the trading of bonds in the global indices is settled on platforms like Euroclear. But the government of India is pushing to settle the trade domestically. 

ET further stated that the country is wary after the Nifty experience in Singapore. Till 2018, the Nifty could be traded in Singapore through derivatives. However, offshore settlement led to a huge wipe-off of the volume. SGX had a higher trade volume than NSE. 

"Some of the large foreign funds who currently trade directly in Indian debt markets are likely to shift their trading to the index if India is included in the JP Morgan bond index," a custodian of a leading bank told ET, "In such a case, if the trades are settled outside India, there could be export of volumes and also reduced liquidity for domestic investors."

One subscription. Two world-class reads.

Already subscribed? Log in

Subscribe to read the full story →
Subscribe to Business Standard digital and get complimentary access to The New York Times

Quarterly Starter

₹900

3 Months

₹300/Month

SAVE 25%

Smart Essential

₹2,700

1 Year

₹225/Month

Save 46%

Super Saver

₹3,900

2 Years

₹162/Month

Subscribe

Renews automatically, cancel anytime

Here’s what’s included in our digital subscription plans

Access to Exclusive Premium Stories Online

  • Over 30 behind the paywall stories daily, handpicked by our editors for subscribers

Complimentary Access to The New York Times

  • News, Games, Cooking, Audio, Wirecutter & The Athletic

Business Standard Epaper

  • Digital replica of our daily newspaper — with options to read, save, and share

Curated Newsletters

  • Insights on markets, finance, politics, tech, and more delivered to your inbox

Market Analysis & Investment Insights

  • In-depth market analysis & insights with access to The Smart Investor

Archives

  • Repository of articles and publications dating back to 1997

Ad-free Reading

  • Uninterrupted reading experience with no advertisements

Seamless Access Across All Devices

  • Access Business Standard across devices — mobile, tablet, or PC, via web or app

Topics :India’s sovereign bondsJPMorganSGX NSECurrent Account DeficitInvestmentNiftysovereign bondsIndia's CADNSEBSEBond index

Next Story