MARCH 20248INTERNATIONAL INVESTORS EXPRESSING INTEREST IN INDIA'S BOND MARKETSTATA SONS TO RESTRUCTURE GROUP TO ADHERE TO RBI REGULATIONSAs India's sovereign debt approaches inclusion in global bond indices, a diverse array of international investors, including long-term institutional funds in Japan, South Korea, and Taiwan, along with exchange-traded funds in Europe, are expressing interest in the domestic bond market.Anita Mishra, Head of Markets and Securities Services at HSBC India, noted a significant influx of clients, not only from major financial hubs but also from countries like Japan, Korea, and Taiwan. Indian bonds are set to be included in JP Morgan's GBI Emerging Markets bond index in June, while Bloomberg plans to incorporate them in its EM index from January 2025. Since JP Morgan's announcement in September, foreign investors have purchased nearly $9 billion of fully accessible government bonds.Vikas Jain, Head of India Trading, FICC, Bank of America, mentioned that the interest is coming from Foreign Portfolio Investors (FPIs) globally, and about five fund houses in Europe have launched ETFs focusing on Indian government bonds. The expectation is for a total flow of about $32-35 billion with the index inclusions.Ashhish Vaidya, Head of Global Financial Markets at DBS Bank India, estimates near-term inflows of $3-4 billion from inclusion in the Bloomberg EM index and anticipates $25 billion over the 10-month period following inclusion in the JP Morgan EM index. This heightened interest underscores the attractiveness of India's bond market to a diverse set of global investors. Tata Sons is reportedly considering a restructuring plan to align itself with Reserve Bank of India (RBI) regulations after the RBI declined to grant any concessions following an informal request. This request sought exemption from the mandatory listing of 'upper layer' non-banking finance companies (NBFCs). Tata Sons, the holding company of the Tata Group, is exploring options such as transferring the holding in financial services company Tata Capital to another entity, which could be a key factor placing Tata Sons in the 'upper layer,' according to an executive familiar with the matter.Tata Sons chairman N Chandrasekaran and a core team of executives have reportedly met with RBI governor Shaktikanta Das and other officials in recent weeks to discuss potential solutions. The RBI has taken a firm stance, as granting an exemption to Tata Sons might prompt similar requests from other corporate holding companies. Following the RBI's refusal, Tata Sons has sought advice from top legal and finance experts to find a resolution.The plan, if implemented, would require approval from Tata Trusts, the philanthropic trusts endowed by members of the Tata family that hold about 66 percent of Tata Sons. The Mistry family of the Shapoorji Pallonji Group, which holds an 18.4 percent stake in Tata Sons, is another stakeholder. The relationship between Tata Sons and the Mistry family has been strained since the ousting of Cyrus Mistry as Tata Sons chairman in 2016. Tata Sons and the RBI have not commented on the matter. TOP STORIES
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