(a) Whether the Reserve Bank of India propose to
scrap the export earners foreign currency account
facility scheme;
(b) if so, the reasons therefor; and
(c) the steps taken/proposed to be taken by the
Government to prop up the dollar supply and tide
over the demand-supply mismatches in the forex market?
MINISTER OF STATE IN THE MINISTRY OF FINANCE (BALASAHEB VIKHE PATIL)
(a): No Sir
(b): Does not arise.
(c): The steps taken by RBI to prop-up the
dollar supply and tide over the demand-supply
mismatches in the forex market are indicated in
Annexure attached.
Annexure to Reply to Lok Sabha Unstarred Question No. 5407 to be answered on Friday,
the 22nd December, 2000.
Some of the steps taken were as follows :-
1. To impose interest free rate surcharge of 50% of the lending rate on import finance.
2. RBI will continue to sell dollars through SBI in
order to augment supply in the market to meet any
temporary demand-supply imbalances.
3. Exporters were advised not to delay repatriation
of export proceeds beyond the due date. In order to
discourage any delay the bank has decided to charge
interest at 25% per annum (minimum) from the date the
bill falls due for payment.
4. Foreign Institutional Investors (FIIs) were free
to approach RBI to procure foreign exchange at the
prevailing market rate. Depending on market
conditions RBI would either sell the foreign exchange
directly or advise the concerned bank to buy it in
the market.
5. Banks were advised to enter in to transactions
in the forex market only on the basis of the genuine
requirements.
6. Cash Reserve Ratio (CRR) was raised from 8.0 to
8.5 % in two stages by 0.25% point each with effect
from 29th July and 12th August, 2000 respectively.
7. Bank rate was increased from 7.0% to 8.0% at the
close of business on 21st July, 2000.
8. Limits of refinance facilities including
collateralized lending facility available to the
Banks were reduced by 50% of the eligible limits
in two stages - 25% each w.e.f. 29th July and 12th
August, 2000 respectively.
9. Now Export Earners` Foreign Currency (EEFC) balance
would be non interest - bearing current account.
10. No credit facilities will be provided by Banks
against EEFC account.
11. In order to raise foreign currency resources
by way of deposits from Non-Resident Indians (NRIs)
and Overseas Corporate Bodies (OCBs), the SBI with
the approval of GOI launched the scheme of India
Millennium Deposits (IMDs) on October, 21, 2000.
The amount received under the scheme was US$ 5.51 billion.