Rupee Convertibility

Ekansh Charangoo (124) MBA 2B

Balance of Payments ‡ BOT : Import and Export of visible goods ‡ BOI : Transaction on Import and Export of services ‡ Balance on current A/C ‡ Capital A/C Transaction : Deposits. Foreign Investments. Borrowings and Lending .

markets ‡ Accepting foreign currency as a medium of transaction in home country . borrowing from domestic/ Int.Meaning of Convertibility ‡ Ease of converting local currency into foreign currency ‡ No interface of RBI or GoI on forex transactions or any approval from them ‡ Residents to have freedom of investment.

Meaning of Convertibility ‡ Freedom to residents for maintaining foreign currency A/C in the home country ‡ Convertibility is all about colour & nationality of currencies loosing significance .

lottery is not permitted Outward tourism : upto $ 10. of Finance ‡ ‡ ‡ ‡ . betting.Status of Convertibility in India India has current a/c convertibility on its BOP with following 4 restrictions: Outward remittances to prize money on racing.A.000 P.000 Health and Education : upto $ 100. Payments to Indian/Foreign artist in foreign currency requires approval of Min.

000 freely for any overseas investments ‡ Fuller convertibility . Some Relaxations: ‡ Outflows of NRI deposits. FII are unrestricted ‡ Indian corporates are allowed to borrow upto $ 500 million under automatic route of RBI ‡ Indian residents can now remit upto $ 200. FDI.Capital A/C Convertibility India doesn t have convertibility on capital a/c.

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