The Reserve Bank of India (RBI) on October 1 permitted balances in Special Vostro Account (SRVA) to be invested in corporate bonds and commercial papers.
With this, the investment horizon has been expanded beyond government securities including government securities.
The RBI in July, 2022, had permitted SRVA to facilitate invoicing, payment, and settlement of exports and imports in Indian rupee, in order to promote exports from India and to support increasing interest of global trading community in Indian rupee.
The RBI also allowed authorised dealer banks in India and their overseas branches to extend rupee loans to residents of Bhutan, Nepal, and Sri Lanka including banks in these countries to facilitate cross-border trade.
Further, to support smoother cross-border lending, the central bank also announced additional measures, including the inclusion of select currencies of India’s major trading partners in the list of reference rates published by Financial Benchmarks India Limited (FBIL).
The RBI’s Monetary Policy Committee (MPC) decided to keep the benchmark repo rate unchanged at 5.5 percent on October 1, second time in a row.
The MPC also kept the stance unchanged to 'Neutral'.
The MPC considered it prudent to wait for impact of policy actions to play our before charting the next policy action.
As a result, the standing deposit facility (SDF) rate remains unchanged at 5.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 5.75 per cent.
The decision was in line with Moneycontrol’s poll of economists and bankers who predicted the RBI’s Monetary Policy Committee (MPC) will hold rates due to comfort from the higher growth in the first quarter while taking time to assess the data on the Goods and Services Tax (GST) reforms.
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