FPI limit in interest rate futures may revive segment

The move by the Reserve Bank of India (RBI) to set aside a Rs 5,000-crore limit for foreign portfolio investors in interest rate futures could breathe life into the lacklustre market.

The RBI did not specify if the limit would be a temporary arrangement.

Interest rate futures are among the best hedging tools for bonds. Since these are settled in cash, these futures can also be treated as a separate asset class. 

Till now, investment in interest rate futures and gilts was allowed within overall limits set by the RBI. If 90 per cent of the limit was exhausted, foreign