RBI's Sanjay Malhotra says forex rules curb speculation, not investments
Business
RBI Governor Sanjay Malhotra wants everyone to know: the latest forex rules announced on October 10 are not "capital controls." Instead, they're aimed at stopping risky, speculative trading, not genuine investments.
Malhotra reassured that nonresidents can still invest in Indian stocks, bonds, and borrowings without any hassle.
FERR requires 20% cash with RBI
The RBI just rolled out something called the Foreign Exchange Reserve Ratio (FERR).
Now, for big forex derivative trades (over $2 million), authorized dealers have to keep 20% of the value as cash with the RBI.
The goal? To keep speculation in check and make sure India's currency market stays steady, without making life harder for real investors.