Home » Govt plans bond buy for $4.3 bn World Bank loans

Govt plans bond buy for $4.3 bn World Bank loans

Govt plans bond buy for $4.3 bn World Bank loans

The Union Finance Ministry has proposed to the government allow the country to borrow an additional $4.3 billion from the World Bank by investing in special bonds. The Union Cabinet is to consider the proposal on September 12.

The Ministry’s proposal is to effect leveraging its foreign exchange reserves. Under the proposal India would gain additional borrowing rights from the International Bank of Reconstruction and Development (IBRD), a World Bank subsidiary that lends to middle income countries, according to the note seen by Reuters on Wednesday, which did not give details.

The arrangement allows India to circumvent the $17.5 billion limit it has with the IBRD, giving it access to more development financing at a time the country is hungry for capital inflows to stabilize the volatile rupee. The Ministry officials said the idea was that the Reserve Bank of India to invest in bonds issued by the World Bank. In return it could borrow the same amount.

The Ministry officials said that by subscribing to these bonds, India would be able to leverage this to get a larger sum of money as a loan for investing in infrastructure.

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