RBI allows oil cos to take ECBs under automatic route

MUMBAI: With the rupee continuing to touch new lows, the Reserve Bank Wednesday allowed forex borrowings for operating capital by means of oil marketing firms -- the biggest shoppers of foreign currency -- under the automatic route with immediate effect.

The central bank has also waived off the $750 million cap that individual state-run refiners had earlier and has capped the full annual foreign currency borrowing under the new norms at $10 billion with immediate effect.

All the state-run oil marketing firms (OMCs) will now be capable of lift exterior commercial borrowings (ECBs) for operating capital purposes with a minimum reasonable adulthood of 3 to five years from all recognised lenders under "the automatic route", the central bank stated.

At provide, OMCs are allowed to boost ECBs from direct or oblique shareholders or a bunch company if the loan is for an average adulthood of five years.

The individual limit of $750 million or identical and obligatory hedging requirements as per the ECB framework have also been waived for borrowings under this dispensation, the central bank stated.

The overall borrowings under the revised norms had been capped at $10 billion and the revision in norms is with immediate effect, the central bank stated, including determination is taken after discussions with govt.

The move comes on a day when the rupee closed at a brand new low of 73.34 towards the buck, after Brent breached the $84 a barrel, towards the former shut of 72.91.

The home foreign money touched a low of 72.41 towards the buck intra-day prior to getting better it to close the consultation at 73.34.

Close to 80 per cent of crude is imported, and OMCs are the largest shoppers of the buck in the country.

There has been a chat around the possibility of opening a distinct switch window for OMCs, as used to be achieved in previous episode of slide in the rupee like in 2013.

The rupee has misplaced over 15 per cent this 12 months, prompting govt and the RBI to launch a series of measures to include volatility together with tariff hikes on imports.
RBI allows oil cos to take ECBs under automatic route RBI allows oil cos to take ECBs under automatic route Reviewed by Kailash on October 04, 2018 Rating: 5
Powered by Blogger.