RBI trying hands on NRIs and Foreign funds

Further, taking advantage of the fact that fate of the overseas Banks is murkier than the Indian counterparts, limit on FII investments has been doubled, to $6billion, for corporate bonds. Groups that are under the Blue-chip category can now raise funds at a cheaper rate. If the attempt succeeds, it is surely going to cause NRIs to prefer Indian banks for putting their money.

Besides these, the Central Bank is to offer Rs.25,000 crore as debt waivers to farmers. This, together with the cuts in CRR is expected to fuel about Rs.65,000 crore. The value well surpasses the amount of Rs. 55,340 that was borrowed by banks from RBI. Consequently, the interest rate at which banks borrow from each other, i.e. the inter-bank rate will too go below 9%. Despite these efforts, the exchange rate is not expected to ease out as the stock market is still unhealthy. A thought to raise the capital adequacy ratio was also there, but knowing that for no bank it is less than 10%, the idea was dropped.