RBI MPC Member Ram Singh Opposes FCNR(B)-like Measures for Foreign Deposits
An RBI Monetary Policy Committee member believes India does not need to attract foreign deposits through special schemes.
Source: GNews RBI EconomyRam Singh, a member of the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC), has stated there is no need to raise foreign deposits using measures similar to the Foreign Currency Non-Resident (Bank) [FCNR(B)] scheme. He believes India's current foreign exchange reserves are robust and sufficient. This stance suggests the RBI is confident in the country's external sector stability and does not foresee a need for extraordinary measures to boost foreign currency inflows. Such schemes are typically used during periods of balance of payments stress or to attract capital.
- Ram Singh, an external member of the RBI's Monetary Policy Committee, expressed this view.
- The FCNR(B) scheme allows Non-Resident Indians (NRIs) to hold deposits in foreign currency with Indian banks.
- These deposits are typically for a fixed term, ranging from one to five years.
- The interest rates on FCNR(B) deposits are linked to LIBOR/SOFR rates and are tax-free in India.
- The RBI has previously used FCNR(B) schemes, sometimes with special incentives, to attract foreign currency during periods of rupee depreciation or capital outflow.
India's central bank, established in 1935 under the Reserve Bank of India Act, 1934. Headquartered in Mumbai, its main functions include monetary policy, currency issuance, banking regulation, and foreign exchange management.
A six-member committee in India responsible for fixing the benchmark interest rate (repo rate) to achieve the inflation target. It was constituted under Section 45ZB of the amended RBI Act, 1934.
Foreign Currency Non-Resident (Bank) deposits are term deposits offered by Indian banks to Non-Resident Indians (NRIs) in foreign currencies like USD, GBP, EUR, JPY, etc. They are fully repatriable and the interest earned is tax-exempt in India.
Exams often test the functions of the RBI, its Monetary Policy Committee, and various foreign exchange management schemes like FCNR(B) and their purpose.
FCNR(B) sounds like 'Foreign Currency for Non-Residents (Bank)'. Remember it's about NRIs depositing foreign money in Indian banks.