Prospects: foreign capital for companies
India and Japan have agreed on a US$75 billion mutual economic cooperation and special strategic and global partnership which would also open foreign capital access to Indian companies.
This comes in the form of US$75 billion Bilateral Swap Arrangement (BSA) between India and Japan.
The Cabinet has given approval 10 Jan 2019 to Reserve Bank of India (RBI) to sign the BSA with Bank of Japan, said the Finance Ministry.
The swap arrangement is to essentially exchange and re-exchange a maximum amount of US$75 billion for domestic currency, for the purpose of maintaining an appropriate level of balance of payments for meeting short-term deficiency in foreign exchange.
“The BSA is a very good example of mutual cooperation between India and Japan for strategic objective of assisting each other in times of difficulty and for restoring international confidence,” said the ministry.
“This facility will enable the agreed amount of Capital being available to India on tap for use. Also, with this arrangement in place, prospects of Indian companies would improve in tapping foreign capital as there would be greater confidence in stability of country’s exchange rate.”
Availability of such swap line to tide over difficulties arising out of Balance of Payment (BOP) would deter speculative attacks on the domestic currency and greatly enhance the RBI’s ability to manage exchange rate volatility, it said. fiinews.com
