The IMF and the Reserve Bank of India (RBI) have signed an agreement under which the Reserve Bank of India will purchase up to $10 billion in IMF notes. “This is a part of the international efforts to support the IMF’s lending capacity,” the Reserve Bank of India said in a statement, adding that the bonds would be held for one year, which could be extended by another year. “The agreement offers India a safe investment instrument at the same time as boosting the Fund’s capacity to help its members to weather the global financial crisis,” the IMF said. The Economic Times notes that while the EU and U.S. are the largest donors to the Fund with promised sums at around $178 billion and $100 billion, respectively, China is slated to give away $50 billion to the multilateral effort. “However, permanent increases in the resources of IMF are expected to take place through an increase in quotas and standing borrowing arrangements which are currently under negotiation,” RBI explained. This opens up room for central banks like RBI to donate more to the cause in the coming months. (AFP, The Economic Times)

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