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- By Parinda News Bureau, March 21, 2006, 11:55 IST
The Reserve Bank of India has set up a committee, under the chairmanship of former Deputy Governor S S Tarapore to make plans of full capital account convertibility of the Indian currency.
Prime Minister Manmohan Singh on Saturday had announced his government's intention to move forward towards making the rupee a fuller capital account convertible currency.
When there is fuller convertibility, there will be no restraint on conversion of local currency into foreign currency and vice versa. At present, there is only current account convertibility.
Once this is done one will be able to use foreign currency for buying assets abroad.
Also, once the transition takes place, Indian nationals and NRIs will be able to carry out capital account transactions without the permission of the RBI. India's coffers are overflowing with foreign exchange reserves: these funds will be better utilised in the new rupee regime.
Likewise, the curbs on foreign exchange that one can carry overseas as a tourist or for business purposes will go.
Foreign currency can again be freely utilised for funding education and medical needs. With no curbs on inflow, it will also facilitate remittances from abroad.
Taking a cue, RBI has already initiated certain technical works on the issue, an official release today said.
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