Higher overseas investments in G-secs may lead to an SLR cut: S&P Global
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Elevated foreign inflows into government bonds following India's inclusion in global bond indices may, over the long term, reduce banks' role in financing the Centre's debt and set the stage for a reduction in the statutory liquidity ratio (SLR), S&P Global's economists said. "India's inclusion in global indexes has increased foreign participation in local debt. In the long run, such a high proportion of FPI (foreign portfolio investor) inflows in government securities may pave the way for a reduction in the statutory liquidity ratio," said Geeta Chugh, MD, sector lead, financial services ratings, S&P Global. At present, the majority of Indian sovereign debt is owned by the banks and financial institutions, several of which have significant state ownership. The SLR refers to the portion of banks' net demand and time liabilities-a proxy for deposits-which must be deployed in liquid assets such as c...