What is the present status of capital account convertibility in India?

In simple terms, a capital account keeps a record of all the transactions related to assets between India and other countries. This includes all kinds of investment assets like shares, debt, and property, or even corporate assets. Currently, India has a partially convertible capital account policy.

What are the restrictions in currency convertibility?

For example, a government with low reserves of hard foreign currency usually restricts currency convertibility because that government would otherwise not be in a position to intervene in the foreign exchange (forex) market (i.e., to revalue, devalue) in order to support their own currency if and when necessary.

Why India is not prepared for full capital account convertibility?

India currently has full convertibility of the rupee in current accounts such as for exports and imports. However, India’s capital account convertibility is not full. There are ceilings on government and corporate debt, external commercial borrowings and equity.

Which account is fully convertible?

In India, there is full current account convertibility since August 20, 1993. India had moved towards a market-determined exchange rate since March 1993. Then the RBI announced in August 1993 that, effective from August 20, India has become fully convertible on the current account.

What is capital and current account convertibility?

Current account convertibility refers to the freedom to convert your rupees into other internationally accepted currencies and vice versa without any restrictions whenever you make payments. Similarly, capital account convertibility means the freedom to conduct investment transactions without any constraints.

What kind of convertibility of currency is permitted in India?

Presently, India has current account convertibility. This means one can import and export goods or receive or make payments for services rendered. However, investments and borrowings are restricted.

Is rupee fully convertible after 1991?

Presently convertibility of money implies a system where a country’s currency becomes convertible in foreign exchange and vice versa. Since 1994, Indian rupee has been made fully convertible in current account transactions.

When did RBI announced fully convertible of rupee on current account?

August 1994
In August 1994 rupee was made fully convertible on the current account. In January 1997, the RBI announced some major relaxation in the currency exchange control.