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    To stem rupee fall, RBI liberalises norms to boost forex inflows

    economy | IST

    To stem rupee fall, RBI liberalises norms to boost forex inflows

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    In a bid to arrest the fall in the Indian rupee, the Reserve Bank of India (RBI) has announced new measures to enhance forex inflows. RBI has announced an incentive to banks to have more foreign deposits. RBI has said that banks will be exempted from CRR and SLR for deposits collected through foreign currency non-resident FCNR(B) deposits.

    In a bid to arrest the fall in the Indian rupee, the Reserve Bank of India (RBI) on Wednesday liberalised norms to boost inflows of foreign exchange, including doubling the borrowing limit under the ECB route, amid the rupee falling against the US dollar.
    In a statement, the central bank said it has been closely and continuously monitoring the liquidity conditions in the forex market and has stepped in as needed in all its segments to alleviate dollar tightness with the objective of ensuring orderly market functioning.
    The measures taken by the central bank come against the backdrop of the rupee depreciating by 4.1 percent against the US dollar during the current financial year so far (up to July 5) amid the ongoing geopolitical tensions.
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    "In order to further diversify and expand the sources of forex funding so as to mitigate volatility and dampen global spillovers", the central bank said it has decided to undertake five measures to enhance forex inflows while ensuring overall macroeconomic and financial stability.
    The measures include easing norms for FPI investment in the debt market and increasing the External Commercial Borrowing (ECB) limit under the automatic route from $750 million or its equivalent per financial year to $1.5 billion.
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