RBI announces measures to revive Rupee

The Reserve Bank of India announced a number of steps, to aid revive the currency and the economy

The measures include increasing limits for external commercial borrowings and government securities .The initiatives are in consultation with the government to liberalize capital account transactions.These measures will permit Indian companies in the manufacturing and infrastructure sector and earning foreign exchange to access External Commercial Borrowing (ECB) for reimbursement of outstanding rupee loans towards capital expenditure and/or fresh Rupee capital expenditure under the approval route.

RBI has fixed the ceiling for such ECBs at $10 billion. The current investment limit by SEBI registered Foreign Institutional Investors (FIIs) in Government Securities (G-Secs) has been elevated further by $5 billion. This will jack up overall limit for FII in G-Secs from $15 billion to $20 billion.

To broaden the base of non-resident investor for G-Secs, it decided to permit long term investors like Sovereign Wealth Funds (SWFs), multilateral agencies, endowment funds, insurance funds, pension funds and foreign central banks to be registered with SEBI, to also invest in G-Secs for the entire limit of $20 billion.

Month: Current Affairs - June, 2012