People familiar said HSBC Holdings has bought at least $3 billion of Indian
government bonds since July, funding the purchases with large inflows raised
under the Reserve Bank of India’s non-resident foreign currency deposit scheme
(FCNR(B)). The bank has concentrated purchases in five-year paper and has
attracted over $10 billion under the scheme, the largest intake among global
peers. The RBI’s overseas dollar window, opened on June 5 to draw foreign
currency and support the rupee, has helped compress domestic funding costs:
since June 5 five-year government yields have fallen about 31bp versus roughly a
12bp decline in the 10-year.
