The Reserve Bank of India (RBI) on Tuesday relaxed the guidelines governing the exchange earner?s foreign currency (EEFC) accounts with regards to the cancellation and rebooking of forward contracts booked by exporters and the net overnight open position limit (NOOPL) of the authorised dealer category-I banks.
In a press release, the RBI said, ?In order to provide operational flexibility to exchange earners/ exporters and authorised dealer (AD) category-I banks, it has been decided to restore the erstwhile stipulation of allowing credit of 100% foreign exchange earnings to the EEFC accounts subject to the condition that the sum total of the accruals in the account during a calendar month should be converted into rupees on or before the last day of the succeeding calendar month after adjusting for utilisation of the balances for approved purposes or forward commitments.?
The release added that in order to allow exporters to cancel and rebook forward contracts to the extent of 25% of the total contracts booked for hedging their exposure; and for computation of net overnight open position involving rupee as one of the currencies, AD category-I banks need not include the positions taken by their overseas branches and also the delta of the options position.
The RBI said these positions will continue to be part of the total NOOPL along with cross-currency positions and positions arising out of exchange traded currency futures/options transactions for calculation of the total foreign currency exposure of banks.
M Rafeeque Ahmed, president, Federation of Indian Export Organisations (FIEO), lauded the RBI move, saying it would particularly benefit the gems and jewellery, electronics, petroleum and plastics sectors as well as merchanting trade. On forward contracts, he said it would provide requisite flexibility enable exporters to re-book the contract which are often a result of the buyer cancelling a scheduled remittance.