New Delhi: Economic Affairs Secretary Ajay Seth The Reserve Bank of India (RBI) on Thursday said measures taken by the Reserve Bank of India (RBI) will boost foreign fund inflows and help strengthen the rupee against the US dollar. reserve Bank of India On Wednesday it raised the foreign borrowing limit for companies and liberal norms for foreign investment in government bonds as it announced measures to boost foreign exchange inflows.
Seth said the RBI’s measures, including external commercial borrowing (ECB), are temporary and for a short period, and will help boost foreign exchange inflows into the country.
The RBI on Wednesday raised the ECB limit under the automatic route from $750 million or its equivalent per financial year to $1.5 billion and relaxed norms for FPI investment in the debt market.
Seth also expressed hope that the global challenges will subside in the short term.
Unveiling the measures on Wednesday, the central bank said all capital inflows, except portfolio investments, remain stable and an adequate level of reserves provides a buffer against external shocks.
Among the new steps, the cap on interest rate offered by lenders on foreign deposits by NRIs has been removed. The discount will be in force till October.
Since the war broke out in Ukraine in late February, the RBI has spent its forex reserves to protect the rupee from sharp depreciation. Headline forex reserves have declined by $40.94 billion since February 25.
The rupee has depreciated by 4.1 per cent against the US dollar during the current financial year so far (till July 5). However, it is modest relative to other EMEs and even major advanced economies (AEs).
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