Foreign Exchange Reserves Current Affairs - 2020

Forex Reserves of India are rising

The Forex Reserves of India are increasing and are to hit 500 billion USD soon. In May 2020, the Indian Forex Reserves touched an all time high of 493 billion USD.

What is Foreign Exchange Reserve?

The Foreign Exchange Reserves are the reserve assets that are held by the central bank in foreign currencies. It is used to back the liabilities faced by a currency due to the influence of monetary policy.

Why are the Forex Reserves rising?

The Forex Reserves of India are increasing mainly due to fall in crude oil prices. Also, the rise is because of the increase in investment in Foreign Direct Investments (FDI) and Foreign Portfolio Investors (FPI).


The Forex Reserves are held by the GoI to maintain liquidity in the country. It also helps to absorb shocks where access to borrowing is curtailed. The Forex Reserves are an important component of Balance of Payment and also an essential element to analyze the external position of the economy.

Components of Foreign Reserves of India

The Foreign Exchange Reserve of India comprises of the following

  • SDR (Special Drawing Rights) in International Monetary Fund. The SDR is the reserve Currency with IMF
  • Gold
  • RTP: RTP is Reserve Tranche Position in International Monetary Fund. It is the reserve capital with International Monetary Fund.

Cabinet Approval: To amend Companies Act, 2013

On March 4, 2020, the Union Cabinet approved 72 changes to the Companies Act, 2013. The main aim of the amendment is to decriminalize the provisions in the act.


The amendment aims to recategorize 23 offences and omit 7 compoundable offences. Under the amendment, the companies with Corporate Social Responsibility (CSR) obligation of less than Rs 50 lakhs need not constitute a CSR committee.

What is CSR?

The CSR is a concept through which a company takes volunteer efforts in philanthropical programmes and adopt businesses that benefit society. The Injeti Srinivas Committee was constituted to review existing frameworks of CSR and strengthen its ecosystem.

Section 129 A introduced

The act is to be amended to make filings more scientific. A new Section 129 A is to be included that will file results of unlisted companies (under the act) on a periodic basis. This is to be done in additional to annual filing.


The amendments will help increase investments, especially foreign investments. This is mainly because, the amendment is to allow domestic firms to list on foreign exchanges. At present, Indian Companies have the option of GDR (Global Depository Receipt) and ADR (American Depository Receipt) alone.