xTo enhance flow of credit to the export sector, the Reserve Bank of India (RBI) has introduced a dollar-rupee swap facility to support incremental pre-shipment export credit in foreign currency (PCFC) by banks, it said on Monday.
Banks will have the option to access rupee refinance to the extent of the swap with RBI under a special export credit refinance facility, said the release.
The facility will be available to banks from January 21 till June 28, 2013, for a fixed tenor of three or six months. "During any particular month, the maximum amount of US dollars that banks would be eligible to avail of from RBI through swaps would be equal to the incremental PCFC disbursed with reference to a base date (November 30, 2012), subject to a limit," RBI said.
The limits would be communicated to eligible individual banks separately. The limits would be reviewed periodically, based on actual utilisation and other relevant factors. The overall cap for the banking system works out to $6.5 billion, said RBI.
"Under the swap arrangement, a bank can buy US dollars up to its eligible swap limit from RBI and simultaneously sell the same amount of dollars forward as per the term of the swap, at the prevailing market rates for swaps of similar tenor," said RBI. At the end of the swap term, the bank will exchange with RBI, the dollars against the rupees, the release added.
The facility will be operationalised by RBI's financial markets department here.
Depending on the market conditions, the central bank would decide the number of banks that can avail of the facility, the maximum amount of swap that RBI would undertake with banks and the maximum quantum each bank can do on a particular day.