Tighten the rules for using of foreign currency fixed deposit funds, RBI announced in a statement that funds can only be used for fulfill needs in form of working capital or routine expenditure of those entities who have with a risk management policy for managing the exchange rate risk.
“Accordingly, it has been decided that the FCNR(B) funds representing deposit liabilities may be utilised for making loans to resident constituents for meeting their foreign exchange requirements,” RBI said.
This notification came out while RBI checks out outflow of forex. Now as per recent revised norms, banks could only lend the money to exporters or corporates that have risk management policy.
Source said, RBI’s move gained the value of rupee that is continuously grounding down or weaken against dollar due to huge demand of dollar.
Currently appreciation in value of dollar has risen, rupee is 53.84 against dollar, after poll results in Greece and France fuelled fresh Eurozone worries.
Huge efforts has been made from side of RBI so that weaken rupee would be strong valued. However, for that interest rate on NRI deposits in banks has increased by it up to 3%, securing high flow of cash.
Terming its as subject to the prudential and interest-rate, credit discipline and monitoring guidelines in force, RBI said in a notification, “Interest rate ceiling on Foreign Currency Non-Resident FCNR (B) deposits of banks has been raised from 125 basis points (bps) above the corresponding LIBOR and to 300 bps for maturity period of three to five years.”
