By Ritu,
Indian authorities are considering allowing corporate bonds as collateral for repurchase operations as they seek to cool the recent spike in corporate borrowing costs in the wake of the coronavirus outbreak.
“We have to work it out. Under the RBI Act, we are not allowed to take any other collateral other than government securities. But we are not looking upon that as an impediment,” a senior official source with knowledge of the matter said.
“We will look at ways in which we can directly reach the corporates. We’re saying just give us time to work our way through these regulations and all, but we are indeed looking at directly helping them out,” he added.
The Indian authorities handling the matter, the Finance Ministry and Reserve Bank of India, both declined to comment on the story.
India has confirmed more than 350 cases of coronavirus, with seven deaths so far. Experts have said the number of cases reflect rates during the early stages of the outbreak in other countries, which then spiked sharply in subsequent weeks.
Dozens of districts across India have been put under lockdowns with train and bus services suspended in most places, causing panic among investors and sparking sell-offs in bonds, equities and the rupee, which hit fresh lifetime-low early on Monday.