The Reserve Bank of India (RBI) has decided to extend the repatriation period for export proceeds in International Financial Services Centre (IFSC) banking unit accounts to three months from one month, offering exporters more flexibility.
“It has now been decided to extend the time period for repatriation, from one month to three months, in case of such foreign currency accounts maintained in IFSC in India,” RBI governor Sanjay Malhotra said while announcing the monetary policy decision on October 1.
In January, the central bank allowed exporters to open foreign currency accounts in banks outside India for realisation of export proceeds. Funds in these accounts can be used for making import payments or have to be repatriated by the end of the next month from the date of receiving the funds.
The central bank will notify the amendments to regulations shortly.
The change will encourage Indian exporters to open accounts with IFSC banking units and also increase forex liquidity in IFSC, Malhotra said.
Repo rate unchanged
The RBI’s monetary policy committee (MPC) left the benchmark repo rate unchanged at 5.5 percent. The central bank, however, raised its GDP forecast for the current fiscal to 6.8 percent with the previous estimate of 6.5 percent.
The decision was in line with Moneycontrol’s poll of economists and bankers which predicted that RBI would hold rates, drawing comfort from higher growth in the first quarter and taking time to assess the data on the Goods and Services Tax (GST) reforms.
The RBI lowered the inflation forecast for the year to 2.6 percent, lower than its previous estimate of 3.1 percent.
The MPC said the outlook on inflation has turned more benign due to lower food prices and tax rate cuts, Malhotra said.
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