The Reserve Bank of India (RBI) on Friday announced a slew of measures aimed at boosting foreign capital inflows into the country. The central bank's Governor stated that these steps, coupled with the tax benefits provided by the government, should help attract foreign capital for government borrowing.
Key Measures Announced
The RBI has decided to increase the limit for Foreign Portfolio Investors (FPIs) in government securities. Additionally, the central bank has eased norms for foreign investors by allowing them to invest in certain categories of bonds without prior approval. The measures are part of the RBI's ongoing efforts to deepen the bond market and attract stable foreign capital.
Impact on Economy
Economists believe that these measures will help in meeting the government's borrowing program and also support the rupee. The RBI Governor expressed confidence that the moves would enhance foreign investor participation in the Indian debt market.
- FPI limit in government securities increased by 2 percentage points to 8% of outstanding stock.
- Foreign investors can now invest in certain government bonds without prior approval.
- The central bank also allowed banks to raise funds through foreign currency borrowings with relaxed norms.
The announcement comes amid global uncertainties and aims to ensure adequate capital flows to finance the current account deficit and support economic growth.
