Source: The Economic Times

NEW DELHI: RBI will lend $5 bn to the government from a staggering foreign exchange reserves of $212 bn for improvment of infrastructure.

"We have succeeded in convincing the RBI to lend five billion dollars from the forex reserves to the India Infrastructure Finance Company Ltd (IIFCL), a 100 per cent state-owned company, which would finance the infrastructure projects of Indian companies, especially for capital imports," a finance ministry official told PTI.

The five billion-dollar loan constitute less than 2.5 per cent of the existing foreign reserves of the country.

RBI's decision follows Finance Minister P Chidambaram's assurance that the borrowed forex reserves would not be spent in the domestic market that could lead to increase in money supply and later inflation.

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Posted by pichu at July 1, 2007 11:04 PM