RBI announces host of measures to support rupee

Mumbai: RBI on June 5 announced a package of measures to support the rupee and manage external sector pressures, including expanding the fully accessible route to cover all new 15-year, 30-year, and 40-year government securities, removing investment concentration limits, easing equity investment norms for non-residents, extending such access to all individuals resident outside India, introducing concessional forex swaps, providing full hedging cost support for dealer banks raising FCNR(B) deposits, and restoring export realisation timelines to nine months after global volatility and weakness in emerging market currencies intensified.The measures aim to attract foreign capital, deepen domestic markets, and improve foreign exchange liquidity. The announcement clarified that recent market chatter on exchange risk covers for foreign borrowing by PSUs does not form part of the June 5 measures, which focus on banking and market-driven facilities.RBI widened the scope of the fully accessible route to deepen the sovereign bond market and attract long-term capital. All new issuances of 15-year, 30-year, and 40-year government securities will now be included under this route. Earlier, only securities up to a 10-year tenor were eligible. The central bank also removed investment concentration limits under this route to enable broader participation. Govt has provided tax benefits on government securities to support foreign investor interest.RBI eased equity investment rules to increase foreign participation in domestic markets. Investment limits for non-resident Indians and overseas citizens of India in listed equity instruments without requiring SEBI registration have been increased. The same facility has been extended to all individual persons resident outside India, aligning their access with that available to OCIs.RBI introduced measures to improve foreign exchange liquidity and support banks in mobilizing foreign currency deposits. A concessional forex swap facility will be offered to the market. Full hedging costs will be provided to dealer banks for raising FCNR(B) deposits.RBI tightened export realisation timelines to accelerate foreign exchange inflows from trade. The time allowed for the realisation of export proceeds has been restored to nine months from the earlier temporary extension of 15 months.RBI said its exchange rate policy remains unchanged despite the new measures. The central bank does not target any specific level or band for the rupee and allows the exchange rate to be determined by market forces. It said it will act to curb excessive volatility and disorderly movements. Foreign exchange reserves stand at $682.3 billion, providing import cover of about 11 months, giving RBI space to deploy market-based instruments if required.