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RBI liberalises import rules

The Reserve Bank of India, which is sitting on record foreign exchange reserves, said on Friday importers did not need its approval to make advance payments of up to $100,000.

Until now, importers could pay advances of up to $25,000. But for remitting larger advances, they need to obtain a guarantee from a bank of international repute situated outside India with the approval of the central bank.

"In case importers fail to import the goods within the prescribed time period from the date of advance remittance, the importer would be required to repatriate the amount remitted immediately," the central bank said in a statement.

India has been steadily relaxing its foreign exchange rules, gradually moving towards a freely floating currency amid record reserves, currently in excess of $64 billion.

The rupee is fully convertible on the current account but only partially convertible on the capital account and is tightly policed by the central bank.

It has gained 1.8 per cent from its life low of 49.08 hit in mid-May on robust trade, investment and expatriate inflows.

In September, the central bank allowed domestic firms to borrow up to $50 million from global sources without government approval and allowed them to prepay foreign loans ahead of schedule.

Earlier in the month, it allowed Indian residents to deposit foreign currency obtained abroad -- through payments received for services provided, honorariums or gifts and residual travel money -- in domestic current accounts with no ceiling.

It also allowed banks to invest some of their foreign currency funds overseas in long-term bonds with ratings one grade lower than highest safety.

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