You are here: Home » PTI Stories » National » News
Business Standard

FinMin, RBI dismiss fears of reverting to cap control regime

Press Trust of India  |  New Delhi 

Seeking to calm rattled investors, the government and RBI today said there was no reverting to capital control regime -- the fear of which spooked stock market, sent rupee to its lowest level and pushed gold prices up by a record Rs 1,300 per 10 gm.

On a day when Sensex fell nearly 770 points or 4 per cent and rupee breached 62 to a dollar on concerns among large investor of capital curbs, the government and RBI went into fire-fighting mode assuring there was no move to check repatriation of funds by FIIs.

"They are saying that a capital control is coming in... There is no question of us putting any restriction on outflows which are commercial in nature, which means whether it is FII sell...," Economic Affairs Secretary Arvind Mayaram told reporters here.

He further said: "there is no control of outflows of dividends, profits, royalties, or on any kind of commercial outflows which happen in the normal course".

Top sources in Reserve Bank blamed "unwarranted rumours" about controls on FII money to the nearly 770 point drop in the benchmark Sensex and rupee dipping to record low of 62.03 intra-day.

India, RBI sources said, had no record of keeping controls on FII money and the capital outflow measures announced on Wednesday were no way bringing back the control regime.

To restrict the outflow of foreign currency, the RBI had on August 14 announced stern measures, including curbs on Indian firms investing abroad and on outward remittances by resident Indians.

The central bank reduced the limit for overseas direct investment (ODI) by domestic companies, other than oil PSUs, under the automatic route from 400 per cent of net worth to 100 per cent. Higher levels of ODI would now need prior approval from RBI.

The measures taken by the RBI cannot be called capital control measures and they had more to do with reducing stress on the balance sheets of corporates, a finance ministry official said.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, August 16 2013. 18:05 IST
RECOMMENDED FOR YOU