The Reserve Bank of India (RBI) is assessing the option of investing in top-rated foreign corporate bonds to generate higher yields. If the plan is approved, it would be a change from the central bank’s existing strategy, where it typically invests in gold and sovereign debt.

“Any investment in overseas corporate debt will, however, be in all likelihood a minuscule fraction of the forex reserves the RBI holds, which may not have a major bearing on overall yields but it will be a significant milestone,” a source told.

According to data released by the RBI on June 1, India’s foreign exchange reserves reached a record $605 billion. In its annual report for the fiscal year 2020-21, the RBI said it will “continue to explore new asset classes, new jurisdictions/ markets for deployment of foreign currency assets (FCA) for portfolio diversification and in the process tap advice from external experts, if required.”