RBI CAUTIOUS ON USE OF FOREX RESERVES FOR CORE PROJECTS

The proposal of the Government on issuing innovative instruments as exchangeable bonds and use of foreign exchange reserves for financing infrastructure may have to wait. In a note sent to the Government, the Reserve Bank of India (RBI) has specified that the proposal of the Government to use foreign exchange reserves for infrastructure projects has implications on the overall policy for External Commercial Borrowing (ECB). Since the overall policy for ECB is under review of both RBI and the Government, the modalities for using reserves for infrastructure will have to wait till a final call is taken on the ECB guidelines.