Reserve Bank of India has agreed to the petroleum ministry?s request for allowing oil marketing companies (OMCs) IOC, HPCL and BPCL to continue with the current mechanism of purchasing dollar through competitive bidding instead of buying half of their dollar requirement from a single bank.
?Oil companies save 2-3 paise per dollar under the competitive route. We have discussed this with with RBI, they are even OK with it,? oil secretary GC Chaturvedi said on Tuesday at the sideline of a conference.
To prevent the rupee?s free fall against the dollar, RBI had earlier directed oil companies to source their dollar purchases from a single bank rather than putting bids for meeting the entire demand. RBI has asked oil marketing firms like HPCL, BPCL and IOC to buy 50% of their dollar needs from the single state run bank, namely State Bank of India (SBI).
Currently, state-run Indian Oil Corporation has sourced around 20% of it?s dollar requirement from the State Bank of India and the balance through competitive bidding from around 16 banks. The other two state-owned oil companies such as Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited source their entire requirement through competitive bidding.
The changes have been suggested in the wake of huge import requirement of oil. Around 80% of the country?s crude oil requirement is imported in the country and demand for dollars to undertake this import results in rupee weakening against the dollar. Inviting quotes for dollar from multiple banks gave an exaggerated impression in the market about pressure on the currency resulting in strengthening of the the dollar against the rupee.
