New measures on the anvil to attract sovereign wealth funds

Looking to attract larger inflows from sovereign wealth funds and foreign pension funds, central government and financial sector regulators have renewed efforts to make Indian markets, especially government bonds, 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. 

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.

Wealth funds Responding to a query on sovereign wealth funds not showing much interest in government securities, Sebi Chairman, U K Sinha, recently said the situation needs to be looked at for more time. “I would like that you should wait for some more time because there has been a change of government and people outside India are waiting for the new policies. My feeling is that it will be successful but we can wait for some more time,” he had said.

At present, $10 billion is the maximum investment limit allowed for entities such as sovereign wealth funds in government securities.