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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.
