India Plays lender to US government

US government Bonds are considered as the safest Investment on the earth. And thus even during the time of recession also, several countries’ Central Banks have invested literally billions of dollars in acquiring Treasury Securities.

Treasury Securities from US Government have become irresistible to central banks of emerging markets, including India. India has lent close to US $ 20 Billion to the US government over the six months since the collapse of that country’s iconic investment bank Lehman Brothers.

According to the latest data shared by the US treasury Department, India’s outstanding exposure to US Government bonds rose to US $ 38.2 Billion from US $ 18.3 Billion in October 2008.

Major Investor          Investment between        Outstanding as of
                                         Oct 08 – Mar 09                  Mar 09

China, Mainland                83.8                          767.9

Japan                             57.1                          686.7

Russia                             27.6                         138.4

India                                     19.9                               38.2

Ireland                            19.6                          54.7

Oil Exporters (3)               15.3                          192

Norway                           14.7                          26.2

Carib Banking Ctr (4)          10.1                         213.6

Hong Kong                        9.1                          78.9

Taiwan                            8.9                           74.8

[SOURCE: US Treasury Department / Federal Reserve Board ($ Bn)]

The latest tranche if Investment into treasuries has made India the fourth-largest creditor to the US after China.

India has now emerged among the Top 15 lenders to the US. Though, Corporates, banks and other financial institutions can subscribe to US treasury bonds, in the case of India, the central bank (RBI)amounts for a large chunk of the Investment.