Capital account convertibility and the role of Indian banks

Abstract

Abstract CAC has become a very important issue in the present economic situation. The relaxation of Current Account and liberalization of trade barriers across countries has made it necessary to review CAC, its role in enhancing trade & economic growth, its benefits & drawbacks, insights from international experience and the current trend in capital controls. In most cases banks have been the main financial intermediaries in the adoption, implementation and surveillance of CAC. This project work identifies these parameters in relation to the Indian financial system in general and banking system in particular. The observations indicate that inflation rate, exchange rates, NPAs and the general system of financial structure in the country is not completely suitable for adoption of CAC.