RBI announces host of measures to attract foreign capital

admin — Fri, 05 Jun 2026 07:47:00 +0000

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| Photo Credit: Getty Images/iStockphoto

To attract foreign capital the Reserve Bank of India (RBI) on Friday (June 5, 2026) announced several measures. The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has decided to keep the repo rate unchanged for the second time in a row, at 5.25%, Governor Sanjay Malhotra announced.

For government securities under the Fully Accessible Route (FAR), the RBI said it was expanding the universe of ‘specified securities’ by including all new issuances of 15-, 30- and 40-year tenor G-secs.

In addition, limits pertaining to short-term investment, concentration and individual securities on FPI investment under the General Route are being removed.

Also Read : RBI Monetary Policy Committee updates

“These measures along with the tax benefits provided by the government this morning should help attract foreign capital for government borrowing,” Mr. Malhotra said.

The RBI has also decided to increase the limits for investment by NRIs and OCIs in equity instruments traded on the stock market without SEBI registration.

Further, the same facility is being extended to all individual Persons Resident Outside India (PROIs) at par with NRIs and OCIs.

The RBI has decided to provide facility of concessional forex swap till September 30, 2026 to incentivize ECBs by PSUs.

Also a similar facility for bearing the full hedging cost will be provided till 30th September 2026 to AD banks for raising fresh 3–5-year FCNR (B) deposits.

The RBI has proposed to restore the time for realisation of export proceeds to nine months from 15 months currently.

“While these measures are expected to strengthen our balance of payments, we will continue to make the right policy adjustments to further promote exports and attract and incentivise capital inflows,” Mr Malhotra said.

He emphasised that RBI’s exchange rate policy remained unchanged.

“We do not target any specific level or band; instead, we allow the exchange rate to be determined by market forces. Our experience, however, suggests that it may sometimes witness movements, often caused by speculative pressures, especially in the wake of heightened uncertainty, that are not in sync with fundamentals and are disruptive of economic activity,” he said.

“While our objective is not to resist market-driven adjustments, we will curb excessive volatility and prevent disorderly market movements,” he said.

“While our foreign exchange reserves provide a strong buffer against external shocks, we have a broad range of regulatory and market-based instruments to respond effectively as may be required. In this regard, we remain vigilant and are fully prepared to do whatever it takes to preserve orderly market conditions,” he added

Published – June 05, 2026 12:03 pm IST

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RBI MPC Meeting: Repo rate unchanged at 6.5% for 8th time in a row

admin — Fri, 07 Jun 2024 04:47:32 +0000

RBI Governor Shaktikanta Das on June 7, 2024, said the Monetary Policy Committee has decided to keep the repo rate unchanged at 6.5%. File
| Photo Credit: ANI

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 6.5%. The decision, taken at the MPC’s meeting on Friday, marks the eighth time in a row that the policy rate has been put on hold to keep the focus on battling high inflation.

The MPC has revised its GDP growth forecast upwards from the earlier 7% estimate to 7.2% for the financial year 2024-2025. It has also decided to remain focused on withdrawal of accommodation to ensure that inflation does not accelerate, while supporting growth.

“These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2% while supporting growth,” Reserve Bank of India (RBI) governor Shaktikanta Das said after the meeting.

Divided MPC

Mr. Das, along with MPC members Shashanka Bhide, Rajiv Ranjan, and Michael Debabrata Patra voted to keep the policy repo rate unchanged at 6.5% and to remain focused on the withdrawal of accommodation, while their colleagues Ashima Goyal and Jayanth R. Varma voted to reduce the policy repo rate by 25 basis points and for a change in stance to neutral.

“There were signs of a more divided policy committee, with one additional member voting for a softening in stance as well as policy direction. The majority retained their cautious stance to guide inflation towards the 4% target on a durable basis, despite recent signs of disinflation,” said Radhika Rao, Executive Director and Senior Economist, DBS Bank, commenting on the decision.

Higher growth forecast

According to the MPC, high frequency indicators of domestic activity are showing resilience in 2024-25. The south-west monsoon is expected to be above normal, which augurs well for agriculture and rural demand, but headwinds from geopolitical tensions, volatility in international commodity prices, and geoeconomic fragmentation pose risks to the outlook.

Taking various factors into consideration, real GDP growth for 2024-25 was projected at 7.2% as compared with the earlier projection of 7%, with the first quarter (Q1) growth estimate at 7.3%; Q2 at 7.2%; Q3 at 7.3%; and Q4 at 7.2%. The risks are evenly balanced.

Elevated food inflation

Emphasising that inflation has seen sequential moderation since February 2024, albeit in a narrow range from 5.1% in February to 4.8% in April 2024, the RBI Governor said that food inflation, however, remains elevated due to persistence of inflation pressures in vegetables, pulses, cereals, and spices.

“Looking ahead, overlapping shocks engendered by rising incidence of adverse climate events impart considerable uncertainty to the food inflation trajectory,” he said, while announcing the MPC’s decisions. He added that volatility in crude oil prices and financial markets, along with the firming up of non-energy commodity prices, pose upside risks to inflation.

Taking various factors into account, CPI inflation for 2024-25 is projected at 4.5%, with Q1 at 4.9%; Q2 at 3.8%; Q3 at 4.6%; and Q4 at 4.5%. The risks are evenly balanced.

Mr. Das emphasised that the path of disinflation has been interrupted by volatile and elevated food inflation due to adverse weather events. “Inflation is expected to temporarily fall below the target during Q2:2024-25 due to favourable base effect, before reversing subsequently. The MPC will remain resolute in its commitment to aligning inflation to the 4% target on a durable basis,” he said.