Masala bonds need policy push: Kanungo

Mumbai: Further "policy nudges" are required for increasing the popularity of masala bonds, Reserve Bank Deputy Governor BP Kanungo has said.

Addressing the forex dealers at an event in Singapore on August 10, Kanungo also called for "urgent" efforts to ensure more coordinated actions among major economies in the face of rising trade tension.

He, however, made it clear that it is "premature to think of de-globalisation", as globalisation is an "irreversible process".

On masala bonds, where local issuers go abroad to raise money in the rupee, he noted that global investors have shown a "healthy appetite" for the rupee-denominated assets.

"This trend needs to be given further policy nudges," he said, adding these bonds ensure flow of forex and also protect issuers from exchange risks.

The first transaction of the masala bond was carried out in 2014 by the World Bank entity IFC for funding infrastructure projects in the country. The speech copy posted by the central bank on its website on Monday did not have any specific suggestions on the possible policy measures.

On trade wars, Kanungo said there does not appear to be any possibility of quick resolution to the disputes between the US and China, nor does it seem to escalate and get out of hand rapidly in near future.

He, however, rued that the row between the two largest economies is contributing to the global slowdown, and listed a no-deal Brexit and the ongoing geopolitical tension in the Gulf as other risks.