The government on Thursday approved a proposal to invest $4.3 billion in World Bank bonds, which will help the country in securing additional funding from the multilateral agency for infrastructure and development projects. With this, India will have a leeway to borrow $ 21.8 billion from the World Bank’s lending arm, International Bank for Reconstruction and Development (IBRD).
“The Cabinet has approved purchase of $4.3 billion bonds of World Bank,” information and broadcasting minister Manish Tewari told reporters after a meeting, which was chaired by Prime Minister Manmohan Singh.
Later, in an official release, the government said, “The Union Cabinet on Thursday gave its approval for entering into Special Private Placement Bonds (SPPBs) arrangement with IBRD for enabling India to have additional borrowing space of $4.3 billion above the Single Borrower Limit (SBL).” It went on to further add that RBI would invest in SPPBs of the IBRD. “The IBRD would be able to lend to India $4.3 billion above the Single Borrower Limit of $17.5 billion, i.e. up to $21.8 billion,” the release said.
The bonds would be of various tenures and the RBI would get return on investment. India’s headroom for borrowing from the World Bank is reaching the limit and investing in these bonds will widen the scope for more loans, sources in the government had earlier said. By subscribing to these bonds, India will be able the leverage this to get larger sums of money as loans for investment.