Indian bond market participants have urged the government to lower short-term borrowings and raise more funds via longer-dated securities in the second half of the financial year, six senior treasury officials told Reuters.
"One of the major suggestions was to increase the supply in the ultra long end of the bond curve, while reducing the same from short to medium term," one of the officials said.
India aims to borrow a gross 15.43 trillion rupees ($186.84 billion) via a sale of bonds this financial year.
About 42% of that is due to be borrowed in October-March, per the current schedule.Insurance companies, provident funds as well as pension funds have been regular bidders at primary auctions.
"With inflows likely continuing, they would be easily able to absorb the rise in 30-year and 40-year bonds," another official said.
All the officials Reuters spoke to requested anonymity as they are not authorised to speak to the media.
On Thursday, RBI also asked market feedback on the appetite for green bonds.The government had raised 160 billion rupees through green bonds in the second half of last year, but hasn't announced any such plan this year.
"The broader feedback on green bonds was that market would not be keen to absorb it at a premium," the treasury head of a state-run bank said.
Traders also suggested limiting the weekly borrowing to 280-300 billion rupees, against 310-390 billion rupees in the first half.Since India's bond yield curve has remained flat for the last few months, cutting down supply at the shorter end could keep short-term yields in check, traders said.
A third meeting is scheduled on Monday, officials said.Traders also said the they suggested introducing a 20-year bond to plug the gap between 14-year and 30-year papers.
A similar suggestion made ahead of the start of this fiscal year was not implemented. Traders said this could be because adding a 20-year bond would reduce demand for the 14-year segment.
The RBI did not immediately reply to a Reuters email seeking comment.
($1 = 82.5855 Indian rupees)(Reporting by Siddhi Nayak and Dharamraj Dhutia; Editing by Sohini Goswami and Dhanya Ann Thoppil)