NEWS & ADVICE : FIXED DEPOSITS
RBI removed limit on loans against NRI deposits to increase liquidity
By Neelima Shankar
Oct 16, 2012
Print    Email    RSS   

The limit on loans taken against non-resident deposits may have been eliminated to improve the liquidity situation in the country. The move is speculated to be a significant step for increasing capital inflow in the economy.

It is to be noted that earlier, there was a restriction on the maximum amount of loan that could be taken, either in foreign currency or in India rupee, against NRE and FCNR(B) term deposits. The maximum amount of loan under these was restricted to Rs. 1 crore. Later, in a notification to banks on October 12 this year, Reserve Bank of India, eliminated this limit.

On why RBI removed the cap, an official from a public sector bank, who is designated as the in charge of NRI operations said that prior to the year 2000, there was no such limit on loans against NRE and FCNR(B) fixed deposits. It was in the year 2000 only that RBI introduced such a cap of Rs. 20 lakh. Later, in the year 2009, this limit was increased to Rs. 1 crore.

Presently, RBI has again eliminated this limit and has permitted the balance in such accounts to be extended by either the third party or by the account holder himself. It is reported that the reason for this could be to increase liquidity in the economy.


(Comments Posted : 0) Post Your Comments
Show All Comments
COMPARE QUICKLY
 Select a product:
 

CALCULATE QUICKLY
 Select a product:
 

EDITORS' PICKS
Need of nomination in bank accounts
Recurring deposits: to the benefit of the...
Regular fixed deposits in India: Great way...
ICICI Bank’s recurring deposit scheme
Carnival of Indian Personal Finance Blogs #4


NANGAL: CaℒL Giℛℒ In Una 09855660911 Escoℛt...
Chandigarh@CaℒL Giℛℒ In Rajpura +O9855660911...
If I invest 100000 rupees deposit for 2 year , how...

NEWS THIS WEEK
Federal Bank launched V connect for its customers Feb 12, 2015
Andhra Bank on expansion mode Feb 11, 2015
Dena Bank earned a profit of 13%. Feb 9, 2015
Banks expected to cut down the rates Feb 5, 2015
RBI kept the rates unchanged Feb 4, 2015
News Archive