Mumbai: State Bank of India Friday said RBI's direction to oil companies to procure half of their dollar requirements directly from a select group of PSU banks will not help stem the fall in rupee.
"I don't think it increases overall availability of dollars or it improves the rupee-dollar price," SBI Chairman Pratip Chaudhuri told reporters after the bank's annual general meeting here.
He said the bank carries a dollar position of up to USD 10 million on a daily basis and to support the large demand from oil marketing companies and Reliance Industries, the single largest importers of crude, it will have to raise money from the open market.
Concerned over rupee's downslide which touched an all time low of 57.37 a dollar today, RBI today asked oil firms, which are the largest buyers of the US currency, purchase 50 per cent of their dollar needs directly through a public sector bank.
RBI feels that oil firms seeking a single quote for their dollar requirement, instead of present practice of floating enquiring with several public and private sector banks, would help check volatility and arrest the free-fall of the rupee.
"It does not increase the overall availability. It is possibly to fend-off the criticism that the RBI is not doing enough," Chaudhuri said.
When asked if the changes bought in today will have any material impact on the exchange rate, he said, "in our understanding, no. It may let the RBI understand what is the demand coming from two or three sources."
Whether the bank will cut lending rates to exporters after the RBI increased the refinance limit of export credit for banks to 50 per cent from the earlier 15 per cent, he said it will be decided tomorrow. He also said the move will release an additional Rs 7,000 crore for SBI.
"Our asset liability committee and the credit policy and procedures committee will be meeting tomorrow to see how we can pass on this benefit. It would not be significant but it can be passed on to our export credit customers as a business strategy," he said.
Earlier in the day, the Reserve Bank directed state-owned oil firms to buy half of their dollar requirement for oil imports from a single public sector bank.
"RBI letter (asking oil marketing companies to buy dollar from a single public sector bank) has come to the government. We are in correspondence with the oil companies to make sure they comply with the directive," Oil Secretary G C Chaturvedi told reporters in New Delhi earlier in the day.
The three big state oil firms need about USD 8 billion every month for crude imports and some petroleum products like LPG.
Reliance Industries and Essar Oil, which together import over 40 per cent of crude shipped to the country annually, will continue to buy dollars as per their company policies.
The nation's largest oil firm Indian Oil needs USD 3-4 billion every month for its oil imports, Chairman R S Butola said. It buys a fifth of its daily forex need from SBI and the rest through bids from a panel of 16 banks.
Bharat Petroleum and Hindustan Petroleum source their entire requirement through competitive bidding and together need about USD 3 billion a month for imports.
First Published: Friday, June 22, 2012, 23:15