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With a view to improving dollar flows into the country, the Reserve Bank of India (RBI) today asked units located in special economic zones (SEZs) to repatriate export proceeds within one year from the date of exports. The change will be applicable with immediate effect and will be valid for one year, the banking regulator said in a communication to banks.
Earlier, there was no time limit for such SEZ units to repatriate money into the country from export proceeds.
RBI's move comes at a time when the Indian rupee has come under intense pressure, recording new lows against the dollar. The Indian currency touched an all-time low of 58.98 on Tuesday in intra-day trading. It later strengthened, after RBI intervened in the currency market. Treasury executives said the devaluation of the rupee triggered the central bank's decision, which would improve supply of dollars in the near-term. The extent of inflow due to this step is estimated to be $5-6 billion over the next few months, which would help arrest the sharp fall of the rupee.
SEZ units should realise and repatriate full value of goods, software and services to India within 12 months. RBI may grant extension on a case-to-case basis.
A senior IDBI Bank executive said there is a tendency among some companies to show exports earning as receivables indefinitely. This move will put a check on this practice and force them to send money back home.
