India
India runs one of the most extensive financial repression regimes among large economies: banks must hold 18% of deposits in government and other approved securities, insurers and the EPFO face minimum government-bond allocations, and small-savings deposits are channelled into government securities at administered rates. Outbound capital is capped under the Liberalised Remittance Scheme and taxed at source, priority sector lending directs 40% of bank credit, and the RBI absorbed nearly half of central government bond issuance through open market purchases in 2025-26.
- 17 in force
- 0 enacted
- 2 proposed or under discussion
Measures as of
How the index is built
Each segment is what one category of rules, or the market pillar, adds to the index. The full bar is 100.
- Captive demand 12.2
- Central bank financing 6.4
- Capital controls 12.4
- Rate caps 5.6
- Prudential sovereign bias 4.0
- Directed credit 6.4
- Tax incentives 5.0
- Real asset restrictions 2.4
- Transaction taxes 1.0
- Market pillar 5.3
Index = 80% × rules (69.2) + 20% × market (26.5) = 60.6
The method in plain words
- Rules pillar (0–100). Each of the 9 categories can add up to its weight (the weights sum to 100). A category's intensity grows with every in-force measure in it: one measure counts by its severity factor (0.25 for severity 1, 0.5 for 2, 0.8 for 3), and each further measure closes part of the remaining gap, so breadth adds with diminishing returns: two severity-3 measures give 96%.
- Market pillar (0–100). The average of the market readings below: how negative the real policy rate is, and how much of the government's debt is held by its own central bank and banks.
- Index. 80% rules + 20% market when market data exists, otherwise rules alone. Laws passed but not yet applying count only in the outlook; proposals never count.
The 9 categories
Weight = the most points a category can add to the rules pillar. Intensity = how much of that weight the in-force measures fill. Open a category to see the measures counted; “What is this?” shows the instruments behind it, worldwide and in history.
- Weight 16Intensity 95%Points 12.2
Mandated holdings of government debt by pension funds, insurers or banks. What is this? →
Captive demand: measures counted in the index Measure counted Severity Factor Points 3 of 3 0.8 6.5 2 of 3 0.5 2.8 2 of 3 0.5 2.8 - Weight 16Intensity 50%Points 6.4
Central bank purchases of government debt, yield curve control, direct monetary financing. What is this? →
Central bank financing: measures counted in the index Measure counted Severity Factor Points 2 of 3 0.5 6.4 - 1 proposed not countedWeight 16Intensity 97%Points 12.4
Limits on moving money abroad, outbound investment limits, FX controls. What is this? →
Capital controls: measures counted in the index Measure counted Severity Factor Points 2 of 3 0.5 2.5 2 of 3 0.5 2.5 2 of 3 0.5 2.5 2 of 3 0.5 2.5 2 of 3 0.5 2.5 - Weight 14Intensity 50%Points 5.6
Caps or ceilings on deposit or lending rates, and administered interest rates. What is this? →
Rate caps: measures counted in the index Measure counted Severity Factor Points 2 of 3 0.5 5.6 - Weight 10Intensity 50%Points 4.0
Prudential rules that favor sovereign debt (zero risk weights, liquidity-buffer rules, leverage-ratio exemptions). What is this? →
Prudential sovereign bias: measures counted in the index Measure counted Severity Factor Points 2 of 3 0.5 4.0 - Weight 10Intensity 80%Points 6.4
State-directed lending, credit guidance, and mandates to invest domestically or in state priorities. What is this? →
Directed credit: measures counted in the index Measure counted Severity Factor Points 3 of 3 0.8 6.4 - Weight 7Intensity 89%Points 5.0
Tax privileges for government bonds, or tax penalties on competing assets. What is this? →
Tax incentives: measures counted in the index Measure counted Severity Factor Points 3 of 3 0.8 3.7 1 of 3 0.25 0.7 1 of 3 0.25 0.7 - 1 proposed not countedWeight 6Intensity 50%Points 2.4
Rent controls, property curbs, and limits on owning gold, cash or crypto. What is this? →
Real asset restrictions: measures counted in the index Measure counted Severity Factor Points 2 of 3 0.5 2.4 - Weight 5Intensity 25%Points 1.0
Financial transaction taxes, stamp duties and similar levies on non-government assets. What is this? →
Transaction taxes: measures counted in the index Measure counted Severity Factor Points 1 of 3 0.25 1.0
Market pillar 26.5 / 100
The average of the readings that have data, worth 20% of the index (5.3 points here).
Real policy rate
16.1 / 1000.9% · Jun 2026
Policy rate minus inflation. A real rate of +2% or more scores 0; −5% or less scores 100; in between it scales in a straight line. Savers lose most when it is deeply negative.
Policy rate 5.25% minus consumer price inflation 4.38% (year on year), 2026-06.
Debt held by the central bank and domestic banks
36.9 / 10022.1% of government debt · 2025-Q4
Share of government debt held by the domestic central bank and domestic banks. 0% scores 0; 60% or more scores 100; in between it scales in a straight line.
Central bank 5.14% + domestic banks 17.01% of general government debt, 2025-Q4.
Indicators
Measured data from international sources, alongside the rules above. Real rates below zero mean savers lose purchasing power.
Policy rate, inflation and real rate
Who holds government debt
The liquidation effect follows Reinhart and Sbrancia: with a negative real rate, about −(real rate × debt) of GDP moves from savers to the state each year. It uses the policy rate, so treat it as a rough guide. Sources: BIS, BIS central bank policy rates; BIS consumer prices; IMF, IMF DataMapper: World Economic Outlook (October 2026); Fiscal Monitor (October 2026); Menzie D. Chinn and Hiro Ito, The Chinn-Ito Index (KAOPEN): a de jure measure of financial openness; IMF, Sovereign Debt Investor Base for Advanced Economies / for Emerging Markets and Developing Economies (Arslanalp and Tsuda).
Measures
Every measure tracked here, with its legal basis and sources. Only in-force measures count in the index.
In force (17)
Gold import duty raised to 15%
Adds 2.4 points to the index
In May 2026 the government raised basic customs duty on gold from 5% to 10% and the Agriculture Infrastructure and Development Cess from 1% to 5%, lifting the import duty from 6% to 15%. With 3% IGST the total effective tax on imported gold is about 18.4%.
Why it counts: Making gold, a traditional household store of value, much more expensive steers savings toward domestic financial assets and conserves foreign exchange.
No legal instrument: a voluntary or informal arrangement.
20% tax collected at source on foreign remittances for investment
Adds 2.5 points to the index
Under section 394 of the Income-tax Act, 2025 (formerly section 206C(1G) of the 1961 Act), banks must collect tax at source of 20% on LRS remittances for investment and other non-specified purposes above Rs 10 lakh per person per year. From 1 April 2026 the rate for education and medical remittances above Rs 10 lakh is 2%.
Why it counts: Tying up a fifth of every large outbound investment remittance until the tax is reclaimed raises the cost of moving savings abroad and favors domestic assets.
Crypto-asset transaction reporting by service providers (CARF)
Adds 2.5 points to the index
Section 509 of the Income-tax Act, 2025 (carried over from section 285BAA, inserted into the 1961 Act by the Finance Act 2025 with effect from 1 April 2026) obliges prescribed reporting entities to file statements on crypto-asset transactions with the tax authority. The Finance Act 2026 (section 101, substituting section 446) sets penalties of Rs 200 a day for failing to file and Rs 50,000 for inaccurate information or failed due diligence. According to a law-firm summary of the CBDT guidance note of 24 July 2026 (the official note could not be opened), India implements the OECD Crypto-Asset Reporting Framework through Rules 241-244 and Form 167 of the Income-tax Rules, 2026: reporting covers calendar years from 2026, with the first filing due by 31 May 2027, and Indian providers report users who are tax-resident outside India, while India receives data on its own residents from partner jurisdictions.
Why it counts: Automatic exchange of crypto-platform data with partner jurisdictions removes the anonymity of holding crypto offshore, so residents who move savings onto foreign platforms to escape the 30% tax and TDS can be identified.
Legal basis Income-tax Act, 2025 (No. 30 of 2025), Section 509(1) - obligation to furnish information on transaction of crypto-asset and 2 more
Income-tax Act, 2025 (No. 30 of 2025), Section 509(1) - obligation to furnish information on transaction of crypto-assetPrimary source
“Any person, being a reporting entity, as may be prescribed, in respect of a crypto-asset, shall furnish information in respect of a transaction of such crypto-asset in a statement”
Finance Bill, 2025 (enacted as Finance Act, 2025), Clause 85 inserting section 285BAA of the Income-tax Act, 1961 (Notes on Clauses)Primary source
“crypto-asset shall have the meaning assigned to it in sub-clause (d) of clause (47A) of section 2. This amendment will take effect from 1st April, 2026.”
Finance Bill, 2026, Clause 87 substituting section 446 of the Income-tax Act, 2025 (penalty)Primary source
“fails to furnish such statement within the time prescribed under the said section, the prescribed income-tax authority under that section may impose on him, a penalty of ₹ 200 for every day”
Priority sector lending targets for banks
Adds 6.4 points to the index
Under the RBI's 2025 Priority Sector Lending Directions, effective 1 April 2025, domestic commercial banks (other than regional rural banks and small finance banks, which face a 75% target) must direct 40% of adjusted net bank credit (ANBC) or credit equivalent of off-balance sheet exposures, whichever is higher, to priority sectors, including 18% to agriculture.
Why it counts: A large share of bank lending is allocated by state priorities rather than by price, which can lower returns on bank assets and, with them, the rates banks can pay depositors.
Legal basis Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2025, FIDD.CO.PSD.BC.13/04.09.001/2024-25, Paragraphs 1.2 and 7.1
Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2025, FIDD.CO.PSD.BC.13/04.09.001/2024-25, Paragraphs 1.2 and 7.1Primary source
“40 per cent of ANBC as computed in para 6 above or CEOBSE, whichever is higher.”
RBI open market purchases of government securities
Adds 6.4 points to the index
Between 4 April 2025 and 13 February 2026 the RBI bought Rs 6,39,203 crore of government securities through OMO purchase auctions, equal to 47% of the Rs 13,65,000 crore the Centre raised in that period. It announced a further Rs 1,00,000 crore of purchases in two tranches on 9 and 13 March 2026.
Why it counts: Heavy central bank buying absorbs a large share of new government bond supply and holds down yields, lowering the government's borrowing cost and the return on bonds held by savers.
Legal basis RBI announces OMO Purchase of Government of India Securities, Press Release 2025-2026/209, Paragraphs 1–2 and 1 more
RBI announces OMO Purchase of Government of India Securities, Press Release 2025-2026/209, Paragraphs 1–2Primary source
“the Reserve Bank will be conducting OMO purchase for an aggregate amount of ₹50,000 crore on May 06, 2025.”
Reserve Bank of India Act, 1934 (Act 2 of 1934), Section 17(8)Primary source
“the Purchase and sale of securities 9[of the Central 10[Government or a 1[State] Government]] of any maturity”
Removal of inflation indexation on long-term capital gains
Adds 0.7 points to the index
For transfers from 23 July 2024, long-term capital gains are taxed at a uniform 12.5% without the indexation benefit that previously adjusted the purchase cost for inflation; resident individuals and HUFs selling land or buildings acquired before that date pay no more than under the old 20%-with-indexation rule. Short-term gains on listed shares and equity funds rose from 15% to 20%, while the annual exemption for listed equity gains rose to Rs 1.25 lakh.
Why it counts: Taxing nominal rather than inflation-adjusted gains means savers in bonds, gold and property can pay tax on gains that are partly or wholly inflation, lowering real after-tax returns.
Minimum approved-securities holdings for life and general insurers
Adds 2.8 points to the index
The Insurance Act, 1938 requires life insurers to hold not less than 50% of their controlled funds, and general insurers a minimum of 30%, in approved securities, which include Government of India securities. IRDAI's 2024 investment regulations and its master circular of 17 May 2024 restate the rule and list central government bonds, Treasury Bills, state government bonds and guaranteed loans as the qualifying categories.
Why it counts: Half of life insurance policyholder funds must sit in government and similar paper, giving the state a captive long-duration buyer for its bonds.
Legal basis Master Circular on Actuarial, Finance and Investment Functions of Insurers, IRDAI/ACTL/CIR/MISC/80/05/2024, Chapter 3, section IV, paragraph 4.11(1); section VIII
Master Circular on Actuarial, Finance and Investment Functions of Insurers, IRDAI/ACTL/CIR/MISC/80/05/2024, Chapter 3, section IV, paragraph 4.11(1); section VIIIPrimary source
“a Life Insurer to hold not less than 50% and a General Insurer to hold a minimum of 30% in Approved Securities”
FIU-IND registration of crypto service providers and blocking of unregistered offshore exchanges
Adds 2.5 points to the index
Since 7 March 2023, exchanging, transferring or safekeeping virtual digital assets for others is a regulated activity under the Prevention of Money-laundering Act, so every VDA service provider serving Indian users, onshore or offshore, must register with FIU-IND as a reporting entity. FIU-IND has issued non-compliance notices to unregistered platforms (9 offshore ones including Binance and Kraken in December 2023, 25 offshore ones in October 2025 and 15 more in September 2026) and sought to make their apps and URLs unavailable: in 2023 by asking MeitY to block them, and since October 2025 by issuing its own takedown notices under section 79(3)(b) of the IT Act.
Why it counts: Residents can only use exchanges that register in India and so fall under Indian KYC, reporting and 1% TDS collection, while unregistered foreign platforms are made unreachable. This closes off the main way to hold crypto outside the domestic tax and surveillance net.
Legal basis Notification S.O. 1072(E) under the Prevention of Money-laundering Act, 2002, Section 2(1)(sa)(vi) PMLA - activities (i)-(v) relating to virtual digital assets and 2 more
Notification S.O. 1072(E) under the Prevention of Money-laundering Act, 2002, Section 2(1)(sa)(vi) PMLA - activities (i)-(v) relating to virtual digital assetsPrimary source
“(i) exchange between virtual digital assets and fiat currencies; (ii) exchange between one or more forms of virtual digital assets; (iii) transfer of virtual digital assets;”
PIB press release, Ministry of Finance, Show cause notices under section 13 PMLA; URL blocking request to MeitYPrimary source
“Director FIU IND has written to Secretary, Ministry of Electronics and Information Technology to block the URLs of said entities that are operating illegally without complying with the provisions of the PML Act in India.”
PIB press release, Ministry of Finance, Section 13 PMLA notices; takedown under section 79(3)(b) IT Act and rule 3(1)(d) of the Intermediary Guidelines (Amendment) Rules, 2025Primary source
“These obligations are activity-based and are not contingent on physical presence of the entity in India.”
LCR treatment of government securities, including the SLR carve-out (FALLCR)
Adds 4.0 points to the index
Under the RBI's Basel III liquidity coverage ratio rules, government securities count as Level 1 high-quality liquid assets. Commercial banks (other than regional rural, local area and payments banks) may also count government securities held within their mandatory SLR as Level 1 assets up to 16% of NDTL under FALLCR, taking the total carve-out from mandatory SLR to 18% of NDTL (2% MSF plus 16% FALLCR).
Why it counts: The same government bonds banks are forced to hold for SLR also satisfy their liquidity coverage requirement, so government debt is the cheapest way to meet both rules.
Legal basis Basel III Framework on Liquidity Standards – Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and LCR Disclosure Standards, Paragraphs 4–6
Basel III Framework on Liquidity Standards – Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and LCR Disclosure Standards, Paragraphs 4–6Primary source
“Government securities as Level 1 HQLA under FALLCR within the mandatory SLR requirement up to 16 per cent of their NDTL.”
Flat 30% tax and 1% TDS on crypto assets, with no loss set-off
Adds 3.7 points to the index
Income from transferring any virtual digital asset (VDA) is taxed at a flat 30%, with no deduction except cost of acquisition, no set-off of VDA losses against any other income and no carry-forward. Buyers must deduct 1% tax at source on the consideration paid for a VDA (no deduction where the year's consideration does not exceed Rs 50,000 for individual/HUF payers with no business income or turnover within the audit limits, or Rs 10,000 for other payers), and must ensure the tax is paid before releasing crypto-for-crypto consideration. Introduced by the Finance Act 2022 as sections 115BBH and 194S of the 1961 Act, the rules now sit in section 194(1) (Table Sl. No. 4) and section 393(1) (Table Sl. No. 8(vi)) / 393(4) (Table Sl. No. 12) of the Income-tax Act, 2025, in force from 1 April 2026. Failing to pay over VDA TDS is a criminal offence under section 476: the Finance Act 2026 replaced the original 3 months to 7 years of rigorous imprisonment with simple imprisonment of up to two years where the unpaid tax exceeds Rs 50 lakh, up to six months for Rs 10-50 lakh, and a fine otherwise.
Why it counts: The 30% rate applies regardless of holding period and losses are ring-fenced and lost, so crypto is taxed far more heavily than equities or exempt government savings, while the 1% TDS on gross turnover drains liquidity from active trading and makes every on-shore trade visible to the tax authority.
Legal basis Income-tax Act, 2025 (No. 30 of 2025), Section 194(1), Table Sl. No. 4 and 3 more
Income-tax Act, 2025 (No. 30 of 2025), Section 194(1), Table Sl. No. 4Primary source
“Any person. Any income from the transfer of any virtual digital asset. 30% (a) No deduction in respect of any expenditure (other than cost of acquisition, if any)”
Income-tax Act, 2025 (No. 30 of 2025), Section 194(1), Table Sl. No. 4, column E(b)Primary source
“no set off of loss from transfer of the virtual digital asset computed herein shall be allowed against income computed under any provision of this Act”
Income-tax Act, 2025 (No. 30 of 2025), Section 393(1), Table Sl. No. 8(vi) (TDS 1%)Primary source
“(vi) Any sum by way of consideration for transfer of a virtual digital asset. Any person.”
Finance Bill, 2022 (enacted as Finance Act, 2022), Clause 59 inserting section 194S of the Income-tax Act, 1961Primary source
“deduct an amount equal to one per cent. of such sum as income-tax thereon”
Industry-wide cap on mutual fund overseas investment
Adds 2.5 points to the index
SEBI limits overseas investment by the whole Indian mutual fund industry to USD 7 billion, with a separate USD 1 billion limit for overseas ETFs. In early 2026 only about 28 international mutual funds and 6 international ETFs were open to fresh money because the cap was nearly used up.
Why it counts: Retail savers cannot freely diversify abroad through domestic funds, so their savings stay in Indian assets, including government bonds.
Legal basis SEBI Circular SEBI/HO/IMD/IMD-II/DOF3/P/CIR/2021/571 — Enhancement of Overseas Investment limits for Mutual Funds, Paragraphs 2.1–2.2
SEBI Circular SEBI/HO/IMD/IMD-II/DOF3/P/CIR/2021/571 — Enhancement of Overseas Investment limits for Mutual Funds, Paragraphs 2.1–2.2Primary source
“US $ 1 billion per Mutual Fund, within the overall industry limit of US $ 7 billion.”
Statutory liquidity ratio for banks (18% of NDTL)
Adds 6.5 points to the index
Banks must keep at least 18% of their net demand and time liabilities (NDTL) in cash, gold or unencumbered approved securities, mainly central government dated securities, Treasury Bills and State Development Loans. The ratio was cut in 25 basis point steps from 19.50% to 18% on 11 April 2020 and is now set out in the RBI's 2025 CRR and SLR Directions for commercial banks.
Why it counts: Nearly a fifth of the deposit base of the banking system must be parked in government paper regardless of yield, creating a large, price-insensitive buyer of central and state government debt.
Legal basis Reserve Bank of India Notification DBR.Ret.BC No.11/12.02.001/2018-19 — Maintenance of Statutory Liquidity Ratio, Paragraphs (i)(f) and (ii)(A)
Reserve Bank of India Notification DBR.Ret.BC No.11/12.02.001/2018-19 — Maintenance of Statutory Liquidity Ratio, Paragraphs (i)(f) and (ii)(A)Primary source
“(e) 18.25 per cent from January 4, 2020 (f) 18.00 per cent from April 11, 2020.”
Administered small-savings rates with proceeds lent to government
Adds 5.6 points to the index
The Ministry of Finance sets interest rates on post office and small-savings schemes each quarter; for October-December 2026 they were left unchanged, with PPF at 7.1%, NSC at 7.7% and the Senior Citizen Savings Scheme and Sukanya Samriddhi Yojana at 8.2%. Net collections go to the National Small Savings Fund, which invests them in special state and central government securities.
Why it counts: A large pool of household savings is collected at rates fixed by the borrower itself and lent directly to central and state governments outside the market, so the government, not the market, decides what these savers earn.
Liberalised Remittance Scheme cap of USD 250,000 a year
Adds 2.5 points to the index
Resident individuals may send abroad up to USD 2,50,000 per financial year under the scheme for permitted current and capital account transactions combined; larger amounts need RBI approval, except documented medical, education and emigration costs. Remittances for margin or margin calls to overseas exchanges are not allowed, and banks may not lend to residents to fund capital account remittances under the scheme.
Why it counts: The cap keeps most household wealth inside India's financial system, where banks and institutions are required to hold government debt.
Legal basis Master Direction – Liberalised Remittance Scheme (LRS), FED Master Direction No. 7/2015-16, Part A, paragraphs 1–2, 5, 7 and 12
Master Direction – Liberalised Remittance Scheme (LRS), FED Master Direction No. 7/2015-16, Part A, paragraphs 1–2, 5, 7 and 12Primary source
“resident individuals up to USD 2,50,000 per Financial Year (April-March) for any permitted current or capital account transaction or a combination of both.”
EPFO investment pattern with a minimum government-securities share
Adds 2.8 points to the index
The investment pattern notified by the Labour Ministry requires the Employees' Provident Fund Organisation to invest at least 45% of fresh accruals in central and state government securities, with equity capped at 15% and invested only through ETFs or index funds.
Why it counts: Mandatory retirement savings of formal-sector workers are steered mainly into government bonds, with only a small share allowed into equities.
No legal instrument: a voluntary or informal arrangement.
Securities transaction tax on shares and derivatives
Adds 1.0 points to the index
Securities transaction tax, introduced in 2004, is charged at 0.1% of value on both purchase and sale of shares traded for delivery. From 1 April 2026 the rate on futures rose to 0.05% from 0.02%, on option premiums to 0.15% from 0.1%, and on exercised options to 0.15% from 0.125%.
Why it counts: The levy adds a cost to every trade in shares and derivatives, trimming returns on market investments that compete with bank deposits and government-run savings.
Tax-exempt status of PPF and other government savings schemes
Adds 0.7 points to the index
Contributions to the Public Provident Fund qualify for a deduction of up to Rs 1.5 lakh a year in the old tax regime (section 80C of the Income-tax Act, 1961, which the Income-tax Act, 2025 replaced from tax year 2026-27), and interest and maturity proceeds are exempt. Sukanya Samriddhi Yojana and the Employees' Provident Fund enjoy similar exempt-exempt-exempt treatment.
Why it counts: Full tax exemption makes government-run savings schemes, whose proceeds fund government borrowing, more attractive than taxable market alternatives.
Under discussion (2)
RBI opposition to stablecoins and non-interest-bearing e-rupee CBDC as the sanctioned alternative
Not counted in the index
The RBI argues against bringing stablecoins into the financial system, saying foreign-currency stablecoins would make capital controls harder to enforce and threaten monetary sovereignty, and that India's existing payment systems leave 'little justification' for them. It promotes the e-rupee (e₹) CBDC instead: retail e-rupee has been live in a pilot since December 2022 through wallets from banks and non-banks, normally linked to the user's savings account, alongside a wholesale pilot and programmable, purpose-bound versions. The e-rupee pays no interest; the RBI's 2022 concept note chose a non-interest-bearing design partly to avoid banks losing deposits.
Why it counts: Keeping dollar stablecoins out of the regulated system preserves the effectiveness of capital controls such as the LRS cap, and the official digital substitute is a zero-interest RBI liability held through domestic banks rather than a yield-bearing or foreign-currency asset.
Legal basis Keynote address at the Mint Annual BFSI Conclave 2025, Paras 21 and 30 (Weakening Capital Account Management; Policy Approach for India) and 3 more
Keynote address at the Mint Annual BFSI Conclave 2025, Paras 21 and 30 (Weakening Capital Account Management; Policy Approach for India)Primary source
“Stablecoins pose challenges for capital flow management (CFM) as domestic households diversify their balance sheets by including foreign-currency denominated stablecoins.”
Keynote address at the Mint Annual BFSI Conclave 2025, Para 30Primary source
“This leaves little justification for their integration into the financial system, even before considering the broader risks they pose.”
Digital Rupee (e₹) FAQs, Q17 (interest) and Q6 (retail pilot live since December 2022)Primary source
“Given the cash-like features of e₹, there is no interest payable on the wallet balances.”
Concept Note on Central Bank Digital Currency, Instrument Design (remuneration)Primary source
“Also considering that physical cash does not carry any interest, it would be more logical to offer non-interest bearing CBDCs.”
Proposed ban on private cryptocurrencies (Cryptocurrency and Regulation of Official Digital Currency Bill)
Not counted in the index
In July 2019 an Inter-Ministerial Committee chaired by the Economic Affairs Secretary recommended banning private cryptocurrencies, with fines and penalties, and published a draft 'Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, 2019'. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which would prohibit all private cryptocurrencies with some exceptions for the technology and set up an RBI digital currency, was listed for introduction in the 2021 winter session; no record of its introduction was found. Since 2022 the government has taxed crypto rather than banned it, and a Department of Economic Affairs crypto consultation paper, reported in January 2025 as due by March 2025, had not been found published as of this check.
Why it counts: An outright ban on holding and trading private crypto would remove it entirely as an alternative store of value outside rupee deposits and government-backed savings.
Legal basis Report of the Inter-Ministerial Committee on Virtual Currencies and draft Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, 2019, Recommendation on private cryptocurrencies and 1 more
Report of the Inter-Ministerial Committee on Virtual Currencies and draft Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, 2019, Recommendation on private cryptocurrenciesPrimary source
“the Group has recommended banning of the cryptocurrencies in India and imposing fines and penalties for carrying on of any activities connected with cryptocurrencies in India.”
Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 (listed in Lok Sabha Bulletin Part II; never introduced), Key objectives (as listed)Primary source
“Seeks to prohibit all private cryptocurrencies in India while allowing for certain exceptions that promote the technology of cryptocurrency.”
Repealed (1)
RBI ban on banks serving crypto users and exchanges (2018, quashed 2020)
Not counted in the index
An RBI circular of 6 April 2018 barred all RBI-regulated entities (banks, NBFCs, payment system providers) from dealing in virtual currencies or providing services to anyone dealing in them, including accounts for exchanges and payments for crypto purchases, and gave them three months to exit such relationships. The Supreme Court set the circular aside as disproportionate on 4 March 2020, and on 31 May 2021 the RBI told banks they could no longer cite it.
Why it counts: Cutting the fiat on- and off-ramps made it practically impossible for residents to move rupee savings into crypto through the banking system.
Legal basis RBI circular RBI/2017-18/154 DBR.No.BP.BC.104/08.13.102/2017-18, Paragraphs 2-3 and 2 more
RBI circular RBI/2017-18/154 DBR.No.BP.BC.104/08.13.102/2017-18, Paragraphs 2-3Primary source
“entities regulated by the Reserve Bank shall not deal in VCs or provide services for facilitating any person or entity in dealing with or settling VCs.”
Judgment, Internet and Mobile Association of India v. Reserve Bank of India, W.P.(C) No. 528 of 2018, Para 7.1Primary source
“the impugned Circular dated 06-04-2018 is liable to be set aside on the ground of proportionality.”
RBI circular RBI/2021-22/45 DOR.AML.REC 18/14.01.001/2021-22, Paragraph 1Primary source
“the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from.”
Before today
12 examples from India in the toolkit, past and present, grouped by what the tool does. Each links to the instrument, its other examples and the cited law.
SteerSteer savings to the state
Captive demand
Mandatory investment of postal and small-savings deposits in government securitiesNational Small Savings Fund (Custody and Investment) Rules, 2001, under Article 283(1) of the Constitution
1999 → nowIn forceTax incentives
Capital-gains exemptions for government securitiesIncome-tax Act 1961, section 47(viic), Sovereign Gold Bonds
2017HistoricalCaptive demand
Statutory liquidity ratios met with government securitiesReserve Bank of India Master Direction on CRR and SLR, 2021, paras 13-14 (under Section 24 of the Banking Regulation Act, 1949)
2021 → nowIn forceCaptive demand
Minimum government-bond shares for pension funds and insurersIRDAI Master Circular on Actuarial, Finance and Investment Functions of Insurers, Ref. IRDAI/ACTL/CIR/MISC/80/05/2024 of 17 May 2024, para 4.11 (restating Insurance Act, 1938, ss. 27A and 27B)
2024 → nowIn forceDirected credit
Mandatory priority-sector lending quotasRBI (Priority Sector Lending – Targets and Classification) Directions 2025, paragraph 7
2025 → nowIn force
HoldHold the price of money down
Central bank financing
Automatic deficit financing through Treasury billsAd hoc Treasury-bill financing practice; Government–RBI arrangements replaced by Ways and Means Advances in April 1997
1997HistoricalCentral bank financing
Treasury overdrafts and ways and means advancesReserve Bank of India Act 1934, section 17(5); Ways and Means Advances arrangements
1997 → nowIn forceRate caps
Prohibition of interest on current accountsMaster Direction DBR.Dir.No.84/13.03.00/2015-16, Interest Rate on Deposits Directions, section 5
2016 → 2024HistoricalCentral bank financing
Maturity extension and Operation TwistRBI Press Release 2020-2021/627 of 12 November 2020, Special Open Market Operations
2020Historical
BlockBlock the exits
Capital controls
Quotas on residents' foreign-currency purchases and outward remittancesReserve Bank of India, Liberalised Remittance Scheme under FEMA 1999 and the FEM (Current Account Transactions) Rules (limit USD 250,000 per financial year)
2004 → nowIn forceReal asset restrictions
Restrictions on financing foreign real-estate purchasesRBI A.P. (DIR Series) Circular 106, 1 June 2015, paragraphs 2-4; Liberalised Remittance Scheme
2015HistoricalReal asset restrictions
Exclusion of crypto users and exchanges from bankingRBI Circular DBR.No.BP.BC.104/08.13.102/2017-18, 6 April 2018
2018Historical
Further reading
- Indian Financial Sector: Structure, Trends and Turns
Mohan, Ray · IMF, 2017
Traces India’s shift from state-directed finance toward gradual liberalization, including lower reserve and government-security requirements and the end of automatic deficit monetization. It finds substantial progress while noting continued public-bank dominance and remaining administered rates.
- The Liquidation of Government Debt
Reinhart, Sbrancia · IMF, 2015
Reconstructs government debt portfolios to measure the transfer from savers to governments when controlled interest rates combine with inflation. It finds substantial postwar debt liquidation and explains why high debt after the global financial crisis could revive these policies.
- Tracking Global Demand for Emerging Market Sovereign Debt
Arslanalp, Tsuda · IMF, 2014
Extends sovereign investor-base measurement to emerging markets, separating domestic banks, nonbanks and central banks from foreign holders. It documents post-crisis foreign inflows and country differences in banks’ government-debt exposure, useful for evaluating funding dependence and potential captive demand.
- Financial Repression and Exchange Rate Management in Developing Countries: Theory and Empirical Evidence for India
Kohli, Kletzer · IMF, 2001
Models how repression generates fiscal revenue and helps manage an exchange rate under capital controls. India’s experience around the 1991 devaluation shows how dependence on implicit financial taxation complicates liberalization and exchange-rate adjustment.