NEW DELHI: State Bank of India has suggested that a sovereign bond issue is the best route for the government to raise funds overseas, fending off possible pressure from the finance ministry that has traditionally opted to piggyback the country's largest bank to raise debt abroad and bolster foreign exchange reserves.
"Getting a government-owned entity to raise funds abroad is no longer the favoured vehicle. Instead, several countries have opted for sovereign issues," said a senior bank executive, who did not wish to be identified given the sensitivity of the issue. Indonesia, Mexico, the Philippines and even Sri Lanka have opted for the route to raise overseas resources.
The statement comes at a time when the government has begun to look at the issue afresh in the wake of dwindling foreign exchange reserves amid threat of a withdrawal of funds by foreign institutional investors. Latest Reserve Bank of India data showed that reserves fell to a three year low of $280 billion at the start of the month.
"Getting a government-owned entity to raise funds abroad is no longer the favoured vehicle. Instead, several countries have opted for sovereign issues," said a senior bank executive, who did not wish to be identified given the sensitivity of the issue. Indonesia, Mexico, the Philippines and even Sri Lanka have opted for the route to raise overseas resources.
The statement comes at a time when the government has begun to look at the issue afresh in the wake of dwindling foreign exchange reserves amid threat of a withdrawal of funds by foreign institutional investors. Latest Reserve Bank of India data showed that reserves fell to a three year low of $280 billion at the start of the month.
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