The liberalization of restrictions on various external transactions led to current account convertibility under Article VIII of the Articles of Agreement of the IMF in 1994. With respect to capital account liberalization, India embarked on a gradual and well sequenced opening up of the capital account.
The active capital account management framework was based on a preference for non-debt creating capital inflows like foreign direct investment and foreign portfolio investment. The capital account is virtually free for nonresidents and resident corporates with some restrictions on financial institutions and higher restrictions on resident individuals.