New Delhi : Looking to attract larger inflows from sovereign wealth funds and foreign pension funds, central government and financial sector regulators have renewed their efforts to make Indian markets, especially government bonds, much more appealing to such investors. The government and regulators are of the view that overseas investments by sovereign wealth funds, multilateral agencies, endowment funds, pension funds, insurers and foreign central banks are much more stable in nature, as compared to institutional investors and hedge funds.
However, these investors follow a much more stricter due diligence process before taking their investment calls and give a lot of focus on a stable policy regime, a senior official said. With a new government in place at the Centre with a clear majority, there are expectations for a much more stable policy environment in India and this appears to be the right time to work towards attracting such investors, he added.
Among others, capital markets watchdog Sebi and banking regulator RBI were asked to identify areas of concerns, if any, for such investors in the current regulatory framework and a final decision in this regard could be announced in the forthcoming Union Budget next month, the official said.
Responding to a query on sovereign wealth funds not showing much interest in government securities, Sebi Chairman U K Sinha recently said that the situation needs to be looked at for some more time.
At present, USD 10 billion is the maximum investment limit allowed for entities such as sovereign wealth funds in government securities.
However, just about 21 per cent of this limit is currently exhausted and there is still scope for investments totalling over Rs 42,000 crore.