RBI measures may bring $50 billion inflows, bond inclusion could add more
New Delhi, June 6
The Reserve Bank of India's latest policy measures aimed at attracting foreign capital could potentially bring nearly $50 billion in inflows, while further gains may come if India secures greater participation in global bond indices, a report has said.
According to ICICI Bank Global Markets, measures announced by the central bank, including support for foreign currency deposits, concessional foreign exchange swap facilities for certain external borrowings and broader access for overseas investors, could attract around $50 billion in inflows.
While keeping the repo rate unchanged at 5.25 per cent, the central bank announced a series of measures designed to encourage foreign currency inflows, improve liquidity conditions and support financial markets amid rising global uncertainties.
The Monetary Policy Committee (MPC) -- led by RBI Governor Sanjay Malhotra -- decided to maintain rates and retain a neutral stance, citing geopolitical tensions, elevated energy prices and uncertainties surrounding global growth and inflation.
Analysts at ICICI Bank Global Markets believe stronger capital inflows could help support the rupee, ease funding pressures within the banking system and improve overall liquidity conditions.
Another key policy announcement was the expansion of the Fully Accessible Route (FAR), which gives foreign investors wider access to government securities.
Combined with recent tax incentives on bond investments, analysts believe the move could strengthen India's prospects for deeper integration with global debt markets and potentially generate additional inflows if broader bond index participation materialises.
Financial markets reacted positively to the announcements, with the rupee recovering from recent weakness while bond markets adjusted to expectations of increased foreign participation.
Despite optimism around capital inflows, analysts cautioned that inflation remains a significant risk, with elevated crude prices and geopolitical uncertainties continuing to cloud the economic outlook.
— IANS
Reader Comments
All this talk of foreign inflows sounds good on paper, but does it really help the common person? ₹50 billion in FII money might make Dalal Street happy, but my monthly grocery bill has gone up 15% due to inflation. RBI needs to focus on bringing down prices of essentials like dal and vegetables, not just wooing foreign investors. Neutral stance means no relief for home loan borrowers either. :-/
This is a masterstroke by Governor Malhotra! Expanding the Fully Accessible Route and adding tax incentives will definitely make Indian bonds attractive for global indices. If we get included in more bond indices, it could bring another $20-30 billion easily. Our economy is being taken seriously globally. Jai ho RBI! 🇮🇳💰
For those complaining, remember that foreign inflows help the rupee strengthen, which reduces our import bill for crude oil and fertilizers. That indirectly helps control inflation. Yes, rate cuts would have been nice for borrowers, but with global uncertainty and high crude prices, a neutral stance is wise. Let's trust the RBI—they know what they're doing. Patience, folks. 🤞
As an NRI, I find these measures promising. The concessional swap facility for external borrowings and support for foreign currency deposits are exactly what we need to encourage more capital flows from diaspora. India's bond market is maturing nicely. I'm considering investing in government securities now that the FAR has been expanded. Good timing by RBI! 🌐📊
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.