Foreign currency bank borrowings norms eased

Experts say in time to come this move directed towards helping rupee to appreciate against dollar

The Reserve Bank of India (RBI) on Wednesday eased the norms for banks borrowing through foreign currency. For bank borrowings exceeding half the unimpaired tier-I capital made on or before November 30 for availing of RBI’s swap facility, the central bank lowered the maturity requirement from three years to a year.

After November 30, the maturity for foreign currency borrowing by banks beyond 50 per cent of their tier-I capital would have to be at least three years, RBI said.

“This move is directed towards attracting foreign flows; it is easier to get borrowings for a year, rather than three years,” said S Srinivasaraghavan, head of treasury at Dhanlaxmi Bank.

Experts said the move was aimed at helping the rupee appreciate against the dollar.

On Wednesday, the rupee ended at 62.44/dollar, against the previous close of 62.77/dollar. It touched a low of 62.89 and a high of 62.33 during intra-day trade. The appreciation resulted from dollar sale by companies and custodian banks.