After discussions between Finance Minister P. Chidambaram and FIIs and banks, the Finance Ministry today said steps to attract capital flows to fund the current account deficit can be expected within a week.
"All measures to attract fund flows are under consideration," Financial Services Secretary Rajiv Takru told reporters after Chidambaram chaired meetings with FIIs and top bankers here.
"I think you should see something coming up shortly, say within a week or in the next 10 days," he said.
Takru did not divulge details about the nature of the measures -- whether they would be a sovereign bond issue, NRI bonds or a quasi-sovereign mode of debt raising.
Concerns among investors about the widening current account deficit have led to turmoil in the stock markets and a sharp depreciation of the rupee.
Chidambaram held a closed-door meeting with top bankers and also met foreign institutional investors, whose money is key to funding CAD, as the government sought to allay apprehensions about India's economic situation and appraise them of steps taken to boost growth and stabilise the rupee.
"FIIs have sought certain explanations, which the Finance Minister gave them," Takru said, without elaborating on what issues were raised in the meeting.
There had been concerns about a return to capital controls after the RBI last week announced curbs on outflows by local companies and residents in a bid to stem the rupee's slide. On Thursday, Chidambaram said no capital control measures are planned.
Takru said several suggestions came up during the meeting with banks. Lenders, especially the State Bank of India, have been opposing the idea of issuing NRI bonds, citing legal complications in the overseas markets, specially in the US.
Chidambaram did not meet reporters outside the hotel where he held discussions with bankers and FIIs.
The rupee, which hit a lifetime low of 65.56 to the dollar on Thursday, has depreciated almost 20 per cent since the beginning of the financial year. The stock markets are down close to 10 per cent this year.
To attract foreign funds, the immediate steps could include nudging banks to increase interest