Role of rbi in the mgmt of forex mkt in india

RBI & FOREX mkts

1. ROLE OF RBI IN THE MANAGEMENT OF FOREIGN EXCHANGE MARKETS IN INDIA

2. Reserve bank of India It is the central bank of I ndia established in 1934 under the RESERVE BANK OF INDIA ACT 1934 I ts head quarters is in M umbai (Maharashtra) It has 226 offices in which four are regional offices located in metropolitan cities

3. Foreign Exchange Management Act

4. Main Features FEMA that gives the central government the power to impose the restrictions Restrictions are imposed on people living in India who carry out transactions in foreign exchange Although selling or drawing of foreign exchange is done through an authorized person Exporters are needed to furnish their export details to RBI

5. What is Foreign Exchange Reserve Management ? The process by which public sector assets are managed in a manner that provides for the ready availability of funds, the prudent management of risks, and the generation of a reasonable return on the funds invested

6. Objectives Reserve management should seek to ensure that : Adequate foreign exchange reserves are available Liquidity , market, and credit risks are controlled in a prudent manner Subject to liquidity and other risk constraints, reasonable earnings are generated over the medium to long term on the funds invested

7. Functions of RBI in foreign exchange reserves

8. MANAGEMENT OF EXCHANGE RATE

9. Authority of RBI in Foreign Exchange Markets Controlling domestic money supply to influence foreign exchange market To actively intervene in forex market as a requirement of ‘managed float’ To review main policy relating to management of reserves To compile and make half yearly reports on management of foreign exchange

10. Ensures timely realization of exports For capital account transaction Engaged on on going basis in reviewing and simplifying the procedures and rules “Standing Consultative Committee on Exchange Control”

11. FERA FEMA NEED FOR IT’S MANAGEMENT

12. ROLE OF RBI IN EXPORT PROMOTION

13. EXPORT PROMOTION MEASURES: With a view to making exports an effective instrument, a number of schemes have been introduced:- Assistance to States for Development of Export Infrastructure and other activities (ASIDE) Scheme Marketing Development Assistance (MDA) Market Access Initiative (MAI) Scheme Export Credit Guarantee Corporation of India Ltd (ECGC)

14. Export Credit Incentives and Promotional Schemes for Agricultural Products & Aquaculture National Export Insurance Account (NEIA)

15. IMPORT PROMOTION MEASURES Imports were classified into Banned items, Canalized items, Restricted items, OGL In 1966 rupee was devalued by 36.5% By devaluation Expansion in export earnings; Indian goods will become cheaper in international market; Import would decline as price of imported goods would increase

16. A rigid itemization of permissible imports caused an element of inflexibility in the pattern of utilization The transferability of licenses among same and different industries was not permissible This gave rise to an expanding black market in import licenses Hence, the import allocation system was so designed to eliminate the possibility of all domestic or foreign competition The Government of India has liberalized the import regime from time to time At present, all controls on import have been lifted

17. BIBLIOGRAPHY RRI’s official website : http://rbi.org.in/ Google Search Wikipedia Foreign Exchange Markets TYBFM – Vipul Prakashan WEBLIOGRAPHY rbidocs.rbi.org.in/ rdocs /Content/PDFs/FUNCWWE080910.pdf http://www.imf.org/external/np/mae/ferm/eng/index.htm http://rbidocs.rbi.org.in/rdocs/Content/PDFs/FUNCWWE080910.pdf