Abstract
An Indian commercial bank (hence forth ’a bank’) is allowed by Section 25 of the Banking Regulations Act 1949 to invest in foreign-currency debt instruments like offshore bonds in Chinese yuan (CNH) or US dollar (USD) up to 25 per cent of its demand and time liabilities. The Committee on Capital Account Convertibility constituted by the Reserve Bank of India (RBI) in 2000 recommended neither any change in the above restriction nor any new restriction in an offshore foreign-currency bond issued by another bank or financial institution in India up to 10 per cent of the sum of its Tier I capital and Tier II capital. Furthermore, within the above limit, as cross-holding, apart from any foreign-currency bond issued by another Indian bank not as part of Tier I or Tier II capital, a bank can invest in Tier II bonds issued in a foreign currency by the head office of a foreign bank incorporated in India and an innovative perpetual foreign-currency debt instrument issued by a domestic bank or a non-bank financial instrument within its Tier I capital.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Bank of England. 2012. Yield Curves. www.bankofengland.co.uk/statistics/Pages/yieldcurve/default.aspx (accessed 27 April 2012).
Bank of International Settlement. 1993. Supervisory Treatment of Market Risks. www.bis.org/publ/bcbs11a.pdf (accessed 3 March 2012).
Bank of International Settlement. 1995. Planned Supplement to the Capital Accord to Incorporate Market Risks. www.bis.org/publ/bcbs15.pdf (accessed 4 March 2012).
Bodie, Z., Kane, A. and Marcus, A. 2004. Investments. New York: McGraw-Hill Irwin.
“Cbonds.ru” Ltd, 2012. Cbonds.info — Bond Issues. http://cbonds.info (accessed 4 March 2012).
CCIL India. 2012. CCIL Rupee Yield Curve. http://ccilindia.com:/RiskManagement /SecuritiesSegment/Pages/ZCYC.aspx (accessed 20 April 2102).
China Daily. 2012. Benchmark Yuan Lending Rate on Horizon. www.chinadailya-pac.com/article/benchmark-yuan-lending-rate-horizon (accessed 21April 2102).
Das, R. 2010. Handbook of Fixed Income Securities: Indian Banking Perspective. Saarbrücken: Verlag Dr. Müller.
Economic Times. 2012. Rs 1,200-crore SBI lifeline for Kingfisher Airlines; DGCA not convinced with KFA’s reply on cancellations. http://articles.economictimes.indiatimes.com/2012–02-22/news/31086846_1_dgca-flight-kingfisher-airlines (accessed 7 March 2012).
Fabbozi, F. 2005. Bond Pricing, Yield Measures and Total Return. In F. Fabbozi (ed.), The Handbook of Fixed Income Securities, pp. 92–94. New York: McGraw-Hill.
Fidelity Management and Research. 2012. Fidelity Price/Yield Calculator. https://powertools.fidelity.com/fixedincome/price.do (accessed 5 March 2012).
Houweling, P., Mentink, A and Vorst, T. 2004. Valuing Euro Rating-Triggered Step-Up Telecom Bonds. Journal of Derivatives, 11(3): 63–80.
HSBC Global Research. 2010. Asia-Pacific Rates Guide 2011. www.research.hsbc.com/midas/Res/RDV?p=pdf&key=ivaHlwAKn9&n=286919.PDF (accessed 12 March 2102).
Hull, J. and Basu, S. 2010. Options, Futures and Other Derivatives. New Delhi: Pearson.
India Code. 2012. The Banking Regulation Act. http://indiacode.nic.in/fullact1.asp?tfnm=194910 (accessed 5 March 2012).
Kalotay, A., Williams, G and Fabbozi, F. 1993 A Model for Valuing Bonds and Embedded Options. Financial Analysts Journal, 49(3): 35–46.
Mccauley, R. 2011. Renminbi Internationalisation and China’s Financial Development. BIS Quarterly Review, December. www.bis.org/publ/qtrpdf/r_qt1112f.pdf.
Moneycontrol.com. 2012. Market at New 52-Wk Low; NPA Woes Hit Banks, RIL Supports in Late Trade. www.moneycontrol.com/news/local-markets/mkt-at-new-52-wk-low-npa-woes-hit-banks-ril-supportslate-trade_635654–2137.html (accessed 2 May 2012).
Reserve Bank of India. 2000. Timing and Sequencing of Measures for Capital Account Convertibility (Part 2 of 2). www.rbi.org.in/scripts/PublicationReportDetails.aspx?UrlPage=&ID=174 (accessed 2 March 2012).
Reserve Bank of India. 2010. Prudential Guidelines on Capital Adequacy — Implementation of Internal Models Approach for Market Risk. http://rbidocs.rbi.org.in/rdocs/notification/PDFs/IMAC070410.pdf (accessed 3 March 2012 (accessed 12 March 2012).
Reserve Bank of India. 2011a. Master Circular — Prudential Norms on Capital Adequacy — Basel I Framework. www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=6517 (accessed 1 March 2012).
Reserve Bank of India. 2011b. Master Circular — Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by Banks. www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=6518 (accessed 2 March 2012).
Saunders, A. and Cornett, M. 2008. Financial Institutions Management: A Risk Management Approach. New York: McGraw-Hill Irwin.
Editor information
Editors and Affiliations
Copyright information
© 2013 Rituparna Das
About this chapter
Cite this chapter
Das, R. (2013). Comparative Risk Analytics between Asian Offshore US Dollar Bonds and Chinese Yuan Bonds from an Indian Commercial Bank’s Perspective. In: Wong, M.C.S., Chan, W.F.C. (eds) Investing in Asian Offshore Currency Markets. Global Financial Markets. Palgrave Macmillan, London. https://doi.org/10.1057/9781137034649_6
Download citation
DOI: https://doi.org/10.1057/9781137034649_6
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-44190-7
Online ISBN: 978-1-137-03464-9
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)