RUPEE CONVERTABILITY &

INDIAN CORPORATE

Group 1
Members:
Bansari Kapadia
Deepak Thadani
Durvesh Javle
Sourab Chopra
Introduction
• Convertibility can be related as the extent to which a country's regulations allow free

flow of money into and outside the country.

• Convertibility is a series of customs regulations restricting the import and export of

rupees.

• Capital Account convertibility in its entirety would mean that any individual, be it Indian

or foreigner will be allowed to bring in any amount of foreign currency into the country

and take any amount of foreign currency out of the country without any restriction.
Convertibility In India
• Liberalization began in 1991, the government eased the movement of foreign
currency on trade account – Movement of foreign currency – first step

• Government liberalized the flow of foreign exchange to include items like amount of
foreign currency that can be procured for purposes like travel abroad, studying
abroad, engaging the services of foreign consultants etc.

• Relaxation on the restriction on the funds that foreign investors can bring into India
to invest in companies and the stock market in the country. This step led to partial
convertibility on the Capital Account.

• Indian companies were allowed to raise funds by way of equities (shares) or debts.

• Listing in Nasdaq or NYSE became new found status symbols for Indian companies.

• In 2000, the forex policy was further relaxed. Indian debt based mutual funds were
also allowed to invest in AAA rated government /corporate bonds abroad.

• Indians being allowed to hold a portion of their foreign exchange earnings as foreign
currency, subject to a limit in the recent monetary policy in October 2002.