Close on the heels of the repo rate cut and moratorium on term loans, the Reserve Bank of India (RBI) on Wednesday allowed exporters to keep their proceeds outside India for 15 months and hiked the Ways and Means Advances (WMA) limit of state governments by 30 per cent to cushion the impact of the coronavirus pandemic and lockdown. The central bank has provided relief to the banking sector’s capital requirements.
The RBI said the time period for realisation and repatriation of export proceeds made up to or on July 31, 2020 has been extended to 15 months from the date of export. “The measure will enable the exporters to realise their receipts, especially from COVID-19 affected countries within the extended period and also provide greater flexibility to the exporters to negotiate future export contracts with buyers abroad,” the RBI said.
Currently, the value of the goods or software exports made by the exporters is required to be realised fully and repatriated to the country within a period of nine months from the date of exports. Export activities have been disrupted in the wake of the pandemic and lockdown in many countries.
Further, the RBI has decided to increase the Ways and Means Advances (WMA) limit by 30 per cent from the existing limit for all states and Union Territories to enable the state governments to tide over the situation arising from the pandemic. The revised limits will come into force with effect from April 1, 2020 and will be valid till September 30, 2020, the RBI said.
The hike in WMA limit is pending submission of the final recommendation of an Advisory Committee, headed by Sudhir Shrivastava, set up by the RBI to review the WMA limits for state governments and Union Territories. WMA is a temporary short-term loan from the RBI to address the mismatch in revenue and expenditure. The Central government on Tuesday increased the ceiling on its WMA facility 60 per cent.
In another relief to the banking sector, the RBI has decided that it is not necessary to activate countercyclical capital buffer (CCyB) for a period of one year or earlier, as may be necessary. The framework on CCyB was put in place by the RBI in terms of guidelines issued on February 15, 2015, wherein it was advised that the CCyB would be activated as and when the circumstances warranted, and that the decision would normally be pre-announced.
📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines