In a major development, the Reserve Bank of India (RBI) is likely to engage external financial consultants to manage a part of its massive foreign exchange reserves, which are now estimated to be hovering at record high levels of around $600 billion, to improve the yields at a time when the interest rates have hit record low globally, reports Economic Times.
With foreign exchange war chest growing to a size of as much as about a fifth of the Indian GDP, the RBI wants to better safeguard the reserves, given the increasing complexities of managing inflows from multiple channels.
Even in its latest annual report, the RBI had underscored that its agenda was to continue to explore new asset classes, new jurisdictions and markets for deployment of foreign currency assets for portfolio diversification, and in the process "tap advice from external experts, if required".
Select global institutions which include some of the Big Four consulting majors and financial institutions are also said to have informally reached out to RBI in this regard. However, no formal appointment has been made so far.
It should be noted that some of the prominent Southeast Asian central banks are also said to have appointed long-term asset managers to partially manage their foreign currency assets.