The Monetary Policy Committee of Reserve Bank of India (RBI) has announced measures favouring the NRI investor. Some of the steps include initiatives enhancing foreign exchange management, remittance flows, and trade-linked transactions.

The committee, led by governor Sanjay Malhotra, aims to make India an accessible destination for the global investor. In line with that, these regulations enable rationalisation of the External Commercial Borrowing (ECB) framework, which covers eligible borrowers and recognised lenders. Their borrowing limits are also being simplified.

The RBI hopes to diversify the use of the Indian rupee in cross-border transactions, allowing authorised dealer banks to lend money in Indian rupee to support trade activities of non-residents in Bhutan, Nepal, and Sri Lanka. It will also ensure the reliability of rupee-based trade.

Another significant move is the opening up of new avenues for overseas institutions and NRIs to use the rupee for transactions and investments in India. Balances in SRVAs (Special Rupee Vostro Accounts) can also be deployed for investments in corporate bonds and commercial papers.

The RBI has extended the repatriation period for funds in International Financial Services Centre (IFSC) accounts from one month to three months in order to support exporters. The central bank has also increased the forex outlay period for Merchanting Trade transactions from four months to six months.

The central bank aims to raise the investment cap for individual foreign investors, including NRIs, in listed Indian companies. If implemented, NRIs will have greater access to Indian equity markets and a stronger stake in the country’s corporate sector.

With Indian banks enabling NRIs to use domestic digital payment systems, the RBI has also introduced new rules for cross-border card transactions, giving banks flexibility to apply risk-based authentication. – editor@nrifocus.com