India's banking sector, dominated by more than two-dozen state-run lenders, has been hobbled by its highest bad-loan ratio.
Oct-Dec current account deficit narrows
Still the Reserve Bank of India will operate as usual and can provide funds via its overnight repo window, traders also said.
Reserve Bank of India (RBI) governor Raghuram Rajan says global markets are at risk of a "crash" should investors start bailing out of risky assets created by the loose monetary policies of developed economies.
India's foreign exchange reserves surged $5.04 billion in the week ending March 28, its biggest weekly rise in four months, as the central bank started to buy dollars regularly in an effort to build up its defences against any potential global turmoil.
Government has forecast annual economic growth to rise to 7.4%.
New Delhi was reluctant to spook investors by clipping the bank's wings
The RBI is not statutorily independent from the government but has long enjoyed wide latitude
Bankers and government officials told Reuters Rajan's successor may be less aggressive in fighting bad loans, but the general direction will remain the same
By tying gold imports directly to export volumes, India is effectively trying to cap how much bullion can be brought into the country, tightening supplies and driving up local prices.
The country last raised the amount of government debt that foreign investors can buy by $5 billion in June last year.
The slowdown is especially pronounced in rural areas, which have suffered two consecutive dry years.
It hopes to attract billions of dollars in investment by this move, and may ease some restrictions on foreign inflows.
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