GK
BANKING AWARENESS AND SEBI
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Partial Convertibility
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Liberalized Exchange rate system
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Both (a) and (b)
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None of these
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Detailed explanation-1: -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-2: -But when the Bretton Woods system collapsed in 1971, the rupee was pegged to pound sterling for four years after which it was initially linked to the basket of 14 currencies but later reduced to 5 currencies of India’s major trading partners. Currently India has adopted the managed exchange rate system.
Detailed explanation-3: -According to the RBI “The Liberalised Exchange Rate Management System (LERMS) was put in place in March 1992 involving the dual exchange rate system in the interim period. The dual exchange rate system was replaced by a unified exchange rate system in March 1993".