What It Means
Mumbai | Kolkata: RBI Governor Raghuram Rajan cut the policy rate by 25 basis points as expected to a five-year low and, with inflation well under control, made several tweaks to monetary policy aimed at ending a liquidity drought and getting bank credit flowing again. Among the steps taken by the central bank that are expected to have a wideranging impact in terms of reducing interest rates further, it moved toward abandoning the policy of keeping the banking system in a cash deficit and eased cash reserve ratio requirements in the monetary policy announced on Tuesday.
“Policy action is significantly greater today than just another 25-basispoints cut,” Rajan told reporters.
Inflation-aiding factors such as rural wages, food prices and imported inflation have been easing
Under the remittance scheme, all resident individuals are allowed to freely remit up to $2,50,000 per financial year for any permissible current or capital account transaction or a combination of both.
RBI is part of the multi-agency inquiry ordered by the government into the holdings of Indians named in the Panama Papers. “We are part of the investigative team that is going to look into these matters,” he said.
The group also comprises officials from the Central Board of Direct Taxes (CBDT), its foreign tax and tax research division and the Financial Intelligence Unit (FIU), which will monitor the flow of information in these cases. The Panama Papers are a leak of over 11 million files from the database of Panamanian law firm Mossack Fonseca that helped clients across the world set up offshore companies. The papers reveal details of over 500 Indians with links to such offshore firms. The multi-agency probe is expected to look into possible tax evasion, money laundering and drug deals. RBI Deputy Governor HR Khan said the investigation into the Panama Papers would reveal which transactions were legitimate. “Under Fema (Foreign Exchange Management Act), a few things are permitted and a few are not. So, the investigation will reveal what is legitimate,” he said.