Who will buy the Rs 4.6 trillion bonds? Market bets on banks' return

Foreign portfolio investors own around 4.5 per cent of the total outstanding debt

With banks staying out of the bond market, fearing rising mark-to-market losses, and foreign investors exhausting their investment limit, the question is who will buy the Rs 4.6 trillion bonds that will be issued from April.

Foreign portfolio investors  (FPIs) can buy up to 5 per cent of the total bonds outstanding. FPIs own around 4.5 per cent of the total outstanding debt. 
 

The government has not said if this facility will be widened. A high proportion of domestic debt in foreign hands could create instability. However, the market is expecting the government will allow FPIs slightly more play in the