FDI, foreign loans push net financial flows to $15.7 bn

An increase in foreign direct investment (FDI) and foreign loans has pushed up the net inflows on financial account in the April-June quarter to $15.7 billion from $13 billion in the same quarter a year ago.

Net FDI, inward flows minus outbound investments, more than doubled to $7.2 billion in the first quarter of 2011-12 from $2.9 billion in same period last year, according to Reserve Bank of India data.

Inflows on account of the external commercial borrowings, banking capital and external assistance touched $14.8 billion, up from $7.6 billion in April-June 2010.

Net loans availed by banks were higher at $11.5 billion as compared to $2.9 billion in the first quarter of 2010-11, mainly due to drawdown of their foreign currency assets held abroad and a rise in overseas borrowings. The short-term credit moderated in the April-June quarter of 2011-12.

Net inflows under short-term trade credit declined to $3.1 billion, against $4.3 billion in the same period a year ago.

Net loans availed by non-government and non-banking sectors stood higher at $2.9 billion as compared to $2.3 billion.