Mumbai, May, 10: The Reserve Bank of India (RBI), the apex bank of country, has allowed AD banks to deploy foreign currency funds for granting loans to resident constituents for meeting their foreign exchange requirements or for the rupee working capital capital expenditure needs subject to the prudential/interest-rate norms, credit discipline and credit monitoring guidelines in force.

RBI had reviewed the interest rate and the end use of the FCNR (B) on May 4, 2012. Accordingly, it has been decided that FCNR (B) funds representing deposit liabilities may be utilized for making loans to resident constituents for meeting -

i. their foreign exchange requirements or
ii. for the rupee working capital/capital expenditure needs of exporters /corporates who have a natural hedge or a risk management policy for managing the exchange risk Subject to the prudential/interest-rate norms, credit discipline and credit monitoring guidelines in force.

All authorized dealer banks and authorized banks may bring the contents of this circular to the notice of their constituents and customers concerned.

Now, the guideline will help banks to utilize this funds better and will help bank to earn from them.