PM Modi woos global investors, says India believes in 'Power to Empower'

New Delhi: Prime Minister Narendra Modi said India believes in growing with the world and for the world, not at anybody's expense, making an outreach to global investors. The principle of 'Power to Empower' is manifested in the 21st century through sharing of technology, data, knowledge and innovation, he said at the Bloomberg New Economy Forum on Tuesday.

The Prime Minister told the gathering of business leaders from India and abroad that the country has seen inclusive growth at a steady pace in the last decade, despite challenges such as the Covid pandemic, wars, disruption of supply chains, trade barriers and supplies of critical minerals being choked off.

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"Every era has had its own sources and definition of power. But in the 21st century, especially in this third decade, a major transformation is taking place. Today, technology is power, data is power, knowledge is power, innovation is power," Modi said. Moreover, the issue is not who possesses power but how it is being harnessed, the PM underlined. "Will technology advance only a few people or will it create new opportunities for millions? Will knowledge remain the strength of only a select few? Or will it enhance everybody's capabilities?" he asked.

Banks Seek Clarity on New Forex Derivatives Norms

Mumbai: Indian lenders have, through an industry body, sought regulatory clarity on the modalities of implementing the latest currency-supporting measures. These include the formula to calculate the newly introduced 20% foreign exchange risk reserve (FERR), the impact of the steps on liquidity ratios, and the methodology to be followed while passing on the costs to customers.

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"The new rules have set a notional value limit of $2 million on all foreign exchange derivative contrasts, but there is still lack of clarity on how this will be implemented," said a person aware of the letter by the Foreign Exchange Dealers' Association (FEDAI) to the central bank.

There are specifics on which bankers need clarity.

"For instance, if a client takes a $2-million exposure through two different banks, he is technically within the limit at both, but above the limit on a gross basis. How should banks calculate that and which bank should maintain the FERR?" asked the person cited immediately above. "Even if it is with the same bank but the exposures are a few days apart, will that be treated as two separate exposures?"

On Saturday, among the measures to dissuade speculative currency trades, the RBI restricted the rebooking of cancelled contracts and imposed a 20% cash reserve requirement on forex derivative contracts above $2 million.

The RBI is likely to release its FAQ on the new measures soon.

After a meeting on Sunday, FEDAI members have sought clarification on the scope of FERR, the $2 million threshold, liquidity and balance sheet treatment, operational instructions on how the deposits will be maintained, implementation timeline and transition period and customer impact.

'Multiple Queries'

"Bankers have sought clarification on hedges of interest/coupon payments, including external commercial borrowing (ECB) interest," said a second person aware of the details. "Clarifications have been sought on the classification of principal and interest payments relating to foreign-currency loans, ECBs, bonds, debt investments and investment income, as well as on the treatment of hedges on current account and capital account transactions."

Banks have sought clarification on levy calculations if the import and export flows offset each other. "The 20% levy will ultimately make import forward dollar purchases more expensive by 12 to 13 paise per month and about 150 basis points in terms of interest rates. Banks are still unclear on how all these calculations will work," said a third person.

Banks have also sought clarification on whether the cash balance maintained with RBI as FERR would qualify as high-quality liquid assets (HQLA) and whether they would form part of the CRR or SLR the lender must statutorily maintain.