Now Reading: Govt meets PSBs to attract foreign capital, stabilise rupee
-
01
Govt meets PSBs to attract foreign capital, stabilise rupee
The government has called a two-day meeting with state-owned lenders on August 17-18 to attract foreign investment and stabilise the rupee. Finance minister Nirmala Sitharaman will review proposals on the second day.…
The Story in Brief
The government has called a two-day meeting with state-owned lenders on August 17-18 to attract foreign investment and stabilise the rupee. Finance minister Nirmala Sitharaman will review proposals on the second day. The PSB Manthan will also discuss deposit mobilisation, MSME credit, and global capability centres. Separately, foreign banks have surged their FCNR deposits from $603 million to $8.97 billion since the RBI's dollar-swap facility was announced in June. HSBC and Standard Chartered led the inflows, with the rupee hitting a record low of 96.96 in May. Economists say durable FDI is needed over short-term deposits, as India's current-account deficit is expected to widen to 1.5-1.7% of GDP in FY27 due to crude oil prices.
The Indian Opinion
The government's push for foreign capital through PSBs is welcome, but the heavy reliance on FCNR deposits, a temporary, leveraged fix, raises concerns. The RBI's swap facility has helped, but FDI is the durable solution. With foreign banks offering up to 19x leverage, local banks must compete without taking undue risk. The real test will be whether India can attract sufficient FDI to cover the widening current-account gap without increasing external vulnerability.
Sources (2): economictimes.indiatimes.com, livemint.com
This story was synthesised by AI from the 2 sources linked above.
Updated: this story now draws on 2 sources.
