The Reserve Bank of India (RBI) sold a net of $33.42 billion in the foreign exchange market in the first six months of the fiscal year to protect the rupee from excessive volatility.

The central bank closely monitors the foreign exchange market. It intervenes only to maintain orderly market conditions by controlling excessive fluctuations in exchange rates without reference to any pre-determined target levels or ranges.

“In the current financial year ending September 2022, RBI’s business has net sales of $33.42 billion (on settlement basis),” Finance Minister Nirmala Sitharaman said in reply to the Lok Sabha.

On October 20, 2022, the Indian rupee (INR) hit a record high of 83.20 against the US dollar. The market determines the value of the rupee.

The US dollar is up 7.8% over the 2022-23 period (to November 30, 2022), she said, as soaring crude oil prices have spillover effects around the world amid heightened global geopolitical tensions and aggressive monetary policy tightening.

The rupee has depreciated 6.9% over the same period, she said, adding that it has outperformed most of its Asian peers, including the Chinese yuan (10.6%), the Indonesian rupiah (8.7%), the Philippine peso (8.5%), the South Korean won (8.1%), Taiwan dollar (7.3%), etc.

The Reserve Bank of India has recently announced several measures to expand the source of foreign exchange funding to mitigate exchange rate volatility, including raising the external commercial borrowing limit to $1.5 billion and raising the aggregate cost cap by 100 basis points until December 31, 2022, under certain circumstances, she said.

To facilitate the growth of Indian exports and support the growing interest in the rupee from the global trading community, the Reserve Bank of India has made additional arrangements for invoicing, payment and settlement of imports and exports in the rupee on July 11, 2022.

Responding to another question, Sitharaman said that under the RBI, non-performing assets, including those for which complete provisioning has been made within four years, have been removed from the balance sheets of the relevant banks under the guidance approved by the bank’s board of directors guidelines and policies.

She said banks assess and consider the impact of write-offs as part of their regular activities to clean up their balance sheets, take advantage of tax incentives and optimize capital in line with board-approved RBI guidelines and policies.

The minister said cancelled loan borrowers are still liable to repay, and the process of recovering dues from cancelled loan account borrowers continues.

She said banks continued to take recovery action against the cancelled accounts through various recovery mechanisms available under the Insolvency and Bankruptcy Code, 2016, such as proceedings in civil courts or debt recovery tribunals.

According to RBI domestic operations data, as of March 31, 2022, she said that 0.82% of the total non-performing assets of banks are related to education loans.