Category: Recommended

India’s foreign currency debt: To do or not to do, that is the question !

The announcement of the substantial increase in government borrowings has again brought forth the debate on Sovereign Foreign Currency Debt. The proponents have been giving various arguments in favour of the issuance including lower costs of borrowing, diversified investor base etc. Those arguing against such an issuance have been highlighting the risks associated with foreign currency denominated borrowings. In this article we have analysed both kind of arguments in detail. But let’s first understand what is meant by Foreign Currency […]

What is Commercial Paper ?

What is Commercial Paper? – CP is essentially an unsecured money market instrument issued in the form of a promissory note . It was formally introduced in Indian market in 1990 with the stated intent to enable “highly rated corporate borrowers to diversify their sources of short-term borrowings and also provide an additional financial instrument to investors”. Reserve Bank of India Act, 1934 gives RBI the authority to regulate all the money market instruments in India. RBI over the past […]

Why does RBI consider coins as Asset but notes as Liability!

If one goes through the balance sheet of RBI, one can observe that Notes issued by RBI come under the Liability section while “Coins” are classified as Assets. Seems confusing, right? Let’s explore the rationale behind this. The RBI Act,1934 gives Reserve Bank of India the sole right to issue bank notes in India. Section 34 of the act further stipulates that the Issue Department of RBI will have as liability an amount equal to the total of the amount […]

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