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RBI eases rules for importers' forex loans

The Reserve Bank of India, buoyed by record forex reserves of more than $60 billion, on Wednesday allowed importers to raise short-term foreign currency loans for up to $20 million without its approval.

"Authorised dealers (banks) can now permit importers in India to avail credit for a period of less than three years without prior approval of the RBI, provided the amount does not exceed $20 million per import transaction," a central bank statement said.

Currently, importers have to take the central bank's permission to arrange short-term credit in foreign currency loans for payment of their bills.

The central bank said the relaxation has been made with a view to simplify import procedures and added that it would deal quickly with applications for short-term loans exceeding $20 million.

Last week, the government allowed domestic firms to borrow up to $50 million from global sources without its approval and also permitted pre-payment of foreign loans ahead of schedule.

Under liberalised norms, Indian companies are allowed to prepay foreign loans up to March 31, 2003 without any limit.

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