The demand for bonds would be impacted among other factors, by the likely pickup in the private sector credit, scaling down of SLR and HTM, the policy stance on foreign portfolio investment in G-sec, etc. 5. With regard to foreign investment in domestic financial markets, our policy has been to increase access in a calibrated and gradual manner.
Though we are sensitive to the  BIS central bankers’ speeches  1  demand for opening markets to foreign investors, the advantages of widening and diversifying investor base which improves demand for government bonds need to be kept in view along with the considerations about financial stability arising from sudden-stop and reversal risks. These risks manifested during the taper tantrum.