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Matkar, Anil
- The Management of Financial Account is an Institutional Approach: Issues and Challenges
Authors
1 SAV Acharya Institute of Management Studies, Shelu, Karjat, IN
Source
TIMSR Journal of Management Research, Vol 1, No Spl (2016), Pagination: 102-112Abstract
Management of Financial Account has some theoretical and institutional approaches and active Financial Account Management framework is based on the policy stance of encouraging non-debt capital inflows and discouraging debt flows. The policy approach in India about Capital Flows has evolved from the broader objectives of maintaining financial and macroeconomic stability.
Impact of Capital Flows on growth ultimately depends on their being stable and less volatility. Durable Capital flows being durable growth while non-durable and volatile capital flows not only being non-durable growth but also long term losses in currency or banking crisis. The global economic scenario has witnessed a shift in approach to financial account management. Experience of cross border capital flows, impact of volatile capital flows on financial markets including exchange markets and capital market garners much interest.
Financial Account is one of the components of Balance of Payment which makes net change in ownership of national assets. A surplus in the capital account implies that money is flowing into country by sale of assets and borrowings whereas deficit in the Capital account indicates that money is flowing out of country by increasing ownership of foreign assets.
Financial Account Management has major issues like Capital Flow and Exchange Rate Management, Capital Account and External Debts, Current Account Deficit, Banking Capital, Trade deficit and Reserves account. In this context, issues and challenges emanating from the shift in approach to financial account management needs to be understood and addressed.
Keywords
Exchange Rate, Capital Flows, Current Account Deficit, Volatile, National Assets.References
- Websites: Money Control.com, RBI websites.
- Newspapers: Financial Express, Business Line, Economics Times, Business Standard.
- CRISIL Research Agency.
- Mohanty, Deepak (2012): “Global Capital flows and the Indian Economy – Opportunities and Challenges”, RBI Monthly Bulletin, February.
- Subbarao, Duvvuri (2013): “Rethinking Macro Policy II: Capital Account Management”, RBI Monthly Bulletin, May.