RBI further eases norms on FX deposits

The Reserve Bank of India (RBI) eased restrictions on the usage of foreign currency deposits on Wednesday, just days after its move to relax the interest rate ceiling on such deposits.

The RBI has allowed banks to use funds from foreign currency non-resident deposits as collateral against lending to related local residents.

The funds in the foreign currency non-resident (FCNR) can be used for foreign exchange needs or for working capital needs in rupees for exporters and corporates, the RBI said, a move that could help attract dollar inflows.

On Friday, the central bank had eased the interest rate ceiling on some FCNR deposits to boost foreign currency inflows, following a sharp fall in the rupee.

The rupee on Friday fell to 53.92 to the dollar -its lowest in 2012, and has lost almost 9% since March.