BANKING AFFAIRS

Detailed explanation-1: -Following the recommendations of the C. Rangarajan Committee, the Liberalized Exchange Rate Management System (LERMS) with the dual exchange rate was implemented. It came into effect on March 1, 1993.

Detailed explanation-2: -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).

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: -Since 1973, the floating exchange rate regime was adopted by countries with following options: managed float system, free float system, crawling peg system, currency board arrangement and target zone arrangement.

Detailed explanation-5: -With the abolition of liberalized exchange rate management system (LERMS) in 1993, the exchange rate of the rupee became market determined.