FOREX INFLOWS

Recently, Reserve Bank of India (RBI) has undertaken measures to enhance forexinflows, amid Depreciation of Indian rupee.
Why has the RBI taken Measures to Boost Forex?
The rupee has depreciated by 4.1 % against the US dollar during the current financial year (2022-23) so far amid the ongoing geopolitical tensions.
Indian Rupee has depreciated 4.1 % to 79.30 against the US dollar in the current financial year (FY 2022-23).
Foreign Portfolio Investors (FPIs) have pulled out Rs 2.32 lakh crore in six months.
India’s forex reserves, over the last 9 months, have decreased by USD 50 billion to USD 593.3 billion.

Forex Reserve

Foreign exchange reserves are assets held on reserve by a central bank in foreign currencies, which can include bonds, treasury bills and other government securities.
Most foreign exchange reserves are held in US dollars.

Components:

Measures

Foreign Portfolio Investors (FPIs) can invest in government securities and corporate bonds.
It has also sought to boost debt portfolio inflows by widening the basket of securities available to FPIs.
FPI is a route for foreign investment in India. It includes investments in shares of listed Indian Company, Non-Convertible Debentures, units of domestic MF (Mutual Fund), Government Securities, Security Receipts, etc.
The RBI has allowed banks to give higher returns on foreign currency deposits on which they will not have to maintain any reserves.
Interest rates should not be higher than those offered by the banks on comparable domestic rupee term deposits.

External Commercial Borrowings

ECBs is a loan availed by an Indian entity from a non-resident lender with a minimum average maturity.
Most of these loans are provided by foreign commercial banks buyers’ credit, suppliers’ credit, securitized instruments such as Floating Rate Notes and Fixed Rate Bonds etc.

SOURCE: THE HINDU,THE ECONOMIC TIMES,MINT

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