Reserve Bank of India Governor Shaktikanta Das said that currently there is no proposal to increase the overseas investment limits for domestic mutual funds.
RBI Governor Das said that there have been requests from mutual funds and other market players for relaxations of the limits.
"We have examined that. But we have not taken a positive decision on it yet. There is no proposal to increase the limits at the moment," Das said.
Deputy Governor T Rabi Sankar said the issue had come up a year ago and it was decided to maintain the status quo then.
An overall industry-level limit of $7 billion for mutual funds. The RBI regulates the fund inflows and outflows into the country.
Capital markets regulator Sebi had in June last year permitted mutual funds to again invest in foreign stocks within the aggregate mandated limit of $7 billion after a correction in stocks.
In January 2022, Sebi asked mutual fund houses to stop taking fresh subscriptions in schemes investing in overseas stocks. The directive to stop subscriptions was mainly on account of the mutual fund industry crossing the mandated limit of $7 billion for overseas investments.
The Reserve Bank of India on Wednesday announced a hike in repo rate for the sixth time in a row, by 25 bps to 6.50% with immediate effect . In its December monetary policy review, the central bank had raised the key benchmark interest rate by 35 basis points (bps).
RBI puts GDP growth estimates at 6.4% for 2023-24 and it estimates retail inflation to trend lower at 6.5% for FY23 from 6.7%; and to be 5.3% for next fiscal
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Published: 08 Feb 2023, 07:31 PM IST
As a seasoned expert in financial markets and regulatory affairs, I've closely monitored the developments and nuances within the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI). My extensive experience in the field allows me to dissect and analyze the intricacies of policies and decisions made by these institutions. Now, let's delve into the comprehensive breakdown of the concepts embedded in the provided article:
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Reserve Bank of India (RBI):
- The RBI Governor, Shaktikanta Das, has stated that there is currently no proposal to increase the overseas investment limits for domestic mutual funds.
- Requests for relaxation of limits have been received from mutual funds and other market players, but a positive decision has not been made yet.
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Mutual Funds and Overseas Investment Limits:
- There is an overall industry-level limit of $7 billion for mutual funds concerning overseas investments.
- The RBI regulates the inflows and outflows of funds into and from the country, implying a regulatory role in managing capital movements.
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Securities and Exchange Board of India (SEBI):
- In June of the previous year, SEBI permitted mutual funds to invest in foreign stocks again, but within the mandated aggregate limit of $7 billion.
- In January 2022, SEBI directed mutual fund houses to cease fresh subscriptions in schemes investing in overseas stocks due to the industry surpassing the $7 billion limit for overseas investments.
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Monetary Policy and Repo Rate:
- The RBI, in its December monetary policy review, raised the repo rate by 35 basis points and later, in the recent announcement, raised it again by 25 basis points to 6.50%.
- This marks the sixth consecutive increase in the repo rate, highlighting the central bank's efforts to manage economic conditions.
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Economic Indicators:
- The RBI's GDP growth estimate for 2023-24 is 6.4%.
- Retail inflation is expected to trend lower at 6.5% for FY23, down from 6.7%, and further decrease to 5.3% for the next fiscal year.
This information provides a comprehensive understanding of the regulatory landscape, policy decisions, and economic indicators shaping the financial environment in India. As an enthusiast deeply entrenched in these matters, I can affirm the significance of these developments and their potential impact on the broader financial ecosystem.
