The Reserve Bank of India, on Wednesday, doubled the re-booking amount limit allowed to exporters on cancelled forward contracts to 50 per cent from 25 per cent.

Facility for importers

The central bank also extended the facility to importers who are currently not allowed to re-book their cancelled forwards contracts.

“To enable exporters, importers greater flexibility in their risk management, we will enhance the limit available to exporters to 50 per cent and allow a similar facility to importers to the extent of 25 per cent,” the newly-appointed RBI Governor Raghuram Rajan said in his first media address.

Legitimate needs

The Governor said the depth in financial market could not be created by banning position taking, or mandating trading based only on well-defined ‘legitimate’ needs.

“Money is fungible so such bans get subverted, but at some level, all investment is an act of faith and of risk taking,” Dr. Rajan said.

He said it was better that investors took positions domestically and provide depth and profits to the country’s economy than taking local markets to foreign shores.

Dr. Rajan said the RBI, along with the government and other regulators such as SEBI, would liberalise financial markets as well as restrictions on investment and position taking.

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