BANKING AFFAIRS

Detailed explanation-1: -Who was the head of this committee? Notes: On the recommendations of the High Level Committee on Balance of Payments headed by Dr C. Rangarajan, the Liberalized Exchange Rate Management System(LERMS) was instituted on March1, 1993.

Detailed explanation-2: -LERMS (Liberalized Exchange Rate Management System) was a new exchange rate management system. The Reserve Bank of India (RBI) purchased 40 percent of the proceeds of exports and inward remittances at the official exchange rate for official use under this scheme.

Detailed explanation-3: -The Indian government introduced the Liberalised Exchange Rate Management System (LERMS) in March 1992. The new system was announced by Manmohan Singh in the 1992 budget and, in early March, by the Reserve Bank of India (RBI). This was the initial step to enable a transition to a market-determined exchange rate system.

Detailed explanation-4: -Rangarajan) the Liberalised Exchange Rate Management System(LERMS) involving dual exchange rate mechanism was instituted in March 1992 which was followed by the ultimate convergence of the dual rates effective from March 1, 1993(christened modified LERMS).