New Delhi, May 10: The Reserve Bank of India, in a bid to shore up the Indian rupee, today directed all exporters to repatriate (read, sell) within a fortnight half their foreign exchange earnings.
Hitherto, all foreign exchange earners were permitted to retain their entire foreign exchange earnings in Exchange Earner's Foreign Currency (EEFC) Account with any authorised dealer in India.
The RBI has now said: “Fifty per cent of the balances in the EEFC accounts should be converted forthwith into rupee balances and credited to the rupee accounts as per the directions of the account-holder.” The
On future foreign exchange earnings, the RBI said an exchange earner would be eligible to retain only 50 per cent in non-interest-bearing EEFC accounts.
The balance had to be surrendered for conversion into rupee balances.
The RBI had made it clear that EEFC scheme “is intended to enable exchange earners save on conversion/transaction costs while undertaking foreign exchange transaction in future.”
As such, the RBI felt, the EEFC facility “is not intended to enable exchange earners to maintain assets in foreign currency.” The RBI pointed out that India “is still not fully convertible on capital account.”
The RBI has informed the EEFC account holders that henceforth they would be permitted to access the foreign exchange market for buying only after they used up fully the available balances in their EEFC accounts.
The RBI also made it clear that the new provisions would apply to holders of Resident Foreign Currency Account and Diamond Dollar Account.
The RBI has also placed limit on intra-day open position/ daylight limit of the authorised dealers.
This limit is now fixed at five times the net overnight open position limit available to them or the existing intra-day open position limit as approved by the RBI, whichever is higher, for positions involving rupee.
The rupee volatility coupled with stock slump saw the RBI last week raise the interest rate ceiling on FCNR (B) (foreign currency non-resident bank) deposits across maturities.
It also allowed banks freedom to determine their interest rates on export credit in foreign currency.
