The terms and conditions for the scheme for FII investment in infrastructure debt and the scheme for non-resident investment in Infrastructure Development Funds (IDFs) have been further rationalized in terms of lock-in period and residual maturity.
The Reserve Bank of India also said that the Qualified Foreign Investors (QFIs) can now invest in those mutual fund schemes that hold at least 25 per cent of their assets (either in debt or in equity or both) in infrastructure sector under the current USD 3 billion sub-limit for investment in mutual funds related to infrastructure.
Industry lobby groups have reacted differently on the steps taken by the RBI to give strength to the Rupee and the economy.
Federation of Indian Chambers of Commerce and Industry (FICCI) said that the steps announced so far are probably minimal at this time but could lead to some inward capital flows if this is supported by stronger fundamentals.
“We were however hoping for a broad based set of strong actions as well as policy reforms that could have a positive bearing on the overall environment. Every delay in announcing such measures is only reducing their ultimate effectiveness and extending the weak phase of our economy. We continue to hope that the government and RBI would take note of FICCI’s suggestions and act on these lines without any delay,” said RV Kanoria, President, FICCI in a statement.
Industry body Assocham hailed the steps taken by the RBI while saying that they will boost the falling rupee and the economy.
“This will also try to dispel the feeling that the government is lying low on serious business agenda to bring the economy back on high growth path. The liberalization of overseas investment in different debt investments should help bring in more funds, which in turn should shore up the rupee to an extent”, said DS Rawat, Secretary General, Assocham.
Notably the Indian currency has depreciated by 25 per cent in last one year and by more than 10 per cent since the start of current financial year against the US dollar. The continuously falling rupee created an urgent need for the government and the RBI to take steps in order to stabilize it.