“With each passing year, the government is moving towards capital account convertibility and this is a step to enhance Indian companies’ overseas investments,” said S C Gupta, chairman and managing director of PNB.

One of the impacts of economic liberalisation is that Indian companies are aspiring to become global players. They are looking for overseas acquisitions. Tata acquiring Corus, Aditya Birla group buying Novelis are some of the recent examples of Indian companies buying global majors. RBI’s move will help Indian companies in fulfilling their global dreams.

The inflows have been growing significantly due to the rising interest rates. This leads to currency appreciation. “The new credit policy will not only check this but also address the demands of Indian companies for their foreign acquisitions,” said Abheek Barua, chief economist, ABN AMRO Bank.

“The RBI has been trying to liberalise the overseas investment in a disciplined manner. The new policy will make Indian players more influential in international markets,” said Rajan Krishnan, business head of Principal PNB AMC.

Welcoming RBI’s monetary policy, said Habil Khorakiwala, president, Ficci: “This is in line with the recommendations of the Tarapore Committee on capital account convertibility and Percy Committee on IFC and clearly shows RBI’s willingness to move towards the CAC in a calibrated manner.”

Some experts have, however, aired their concerns on this issue. “This will reduce inflow and increase outflow in a scenario where we need more capital expansion. Rather than encouraging outflow of capital, the RBI should have encouraged greater capital absorption for capacity expansion,” said Rajiv Kumar, director and chief executive of ICRIER.

The monetary policy that encourages outward flow of foreign currency will check the appreciation of Rupee. “The various measures announced in the policy, which also indicate certain degree of liberal approach to outward flow of foreign currency, are most welcome under the present conditions, since they would have a sobering effect on the rapidly appreciating rupee,” said CII president R Seshasayee.