Raghuram Rajan, the 23rd governor of the Reserve Bank of India (RBI) in his first remarks after taking the helm at the central bank, said India's economy was 'fundamentally sound' and had a 'bright future. Dismissing the S&P statement of a one in three chance of rating downgrade for India as nothing new, Rajan underscored that both gloom and doom were overdone and that the country’s medium rung future was strong.
Flagging off monetary stability as the prime role of RBI, he unveiled that the central Bank will issue inflationary index saving certificates. Further, the new governor highlighted that that besides preserving the purchasing power of the rupee, inclusive growth and development, as well as financial stability were the two other important RBI’s mandate.
Further, in slew of measures outlined on Day 1, the central bank permitted exporters to re-book cancelled forward exchange contracts to the extent of 50% of the value of cancelled contracts as against 25% earlier. It also extended a similar facility to importers to the extent of 25%. Meanwhile, to develop the money and G-sec markets, the central bank would now to introduce cash settled 10 year interest rate future contracts and also examine the introduction of interest rate futures on overnight interest rates.
In yet another important development, Rajan highlighted that the central bank would offer special concessional window to bank for swapping FCNR dollar funds, mobilized for a minimum tenor of three years and over, at a fixed rate of 3.5% per annum for the tenor of the deposit.
Additionally, obliging the bank, the central bank’s new governor decided to raise the current overseas borrowing limit to 100% of the unimpaired Tier I capital as against 50% earlier and mobilize the borrowings under this provision to be swapped with Reserve Bank of India at the option of the bank at a concessional rate of 100 basis points, below the ongoing swap rate prevailing in the market.
Flagging off monetary stability as the prime role of RBI, he unveiled that the central Bank will issue inflationary index saving certificates. Further, the new governor highlighted that that besides preserving the purchasing power of the rupee, inclusive growth and development, as well as financial stability were the two other important RBI’s mandate.
Further, in slew of measures outlined on Day 1, the central bank permitted exporters to re-book cancelled forward exchange contracts to the extent of 50% of the value of cancelled contracts as against 25% earlier. It also extended a similar facility to importers to the extent of 25%. Meanwhile, to develop the money and G-sec markets, the central bank would now to introduce cash settled 10 year interest rate future contracts and also examine the introduction of interest rate futures on overnight interest rates.
In yet another important development, Rajan highlighted that the central bank would offer special concessional window to bank for swapping FCNR dollar funds, mobilized for a minimum tenor of three years and over, at a fixed rate of 3.5% per annum for the tenor of the deposit.
Additionally, obliging the bank, the central bank’s new governor decided to raise the current overseas borrowing limit to 100% of the unimpaired Tier I capital as against 50% earlier and mobilize the borrowings under this provision to be swapped with Reserve Bank of India at the option of the bank at a concessional rate of 100 basis points, below the ongoing swap rate prevailing in the market.
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