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RBI Proposes Changes to Overseas Rupee Accounts and Reports Increase in Income


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The Reserve Bank of India (RBI) has proposed allowing overseas rupee accounts to lend money to individuals who are not residents of India. This move is outlined in the RBI’s annual report. Additionally, the central bank has suggested permitting the opening of rupee accounts outside of India by non-residents. These proposed changes aim to liberalize the external commercial borrowing (ECB) framework and improve the role of the Gujarat International Finance Tec-City (GIFT City) in Gandhinagar, Gujarat, in comparison to other international financial centers.

Rationalization of Guidelines and Remittance Schemes

The RBI has also highlighted the need for continuous synchronization of the Foreign Exchange Management Act (FEMA) operating framework with the evolving macroeconomic environment. As a result, the central bank plans to focus on rationalizing various guidelines. Furthermore, the RBI intends to rationalize the Liberalized Remittance Scheme (LRS) and the inward remittance schemes, namely the Money Transfer Service Scheme (MTSS) and the Rupee Drawing Arrangement (RDA).

Increase in Income for the RBI

According to the RBI’s annual report, the central bank’s income for the fiscal year 2023-2024 (FY24) increased by approximately 17% compared to the previous year. This rise in income can be attributed to a significant increase in interest income from foreign securities. Specifically, interest income from foreign securities rose to Rs 65,327.93 crore in FY24, compared to Rs 43,649.26 crore in FY23. Overall, the RBI’s income, consisting of interest income and other income, reached Rs 2.76 lakh crore in FY24, up from Rs 2.46 lakh crore in the previous financial year.

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