RBI feels that oil firms seeking a single quote for their dollar requirement, instead of present practice of floating enquiring with several pubilc and private sector banks, would help check volatility and arrest the free-fall of the rupee.
"RBI letter (asking oil marketing companies to buy US currency 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 here.
The three big state oil firms need about USD 8 billion every month for import of crude oil and some petroleum products like LPG.
Chaturvedi said RBI has asked only the state-owned oil marketing companies to buy half of their daily foreign exchange needs from a public sector banks and the rest could be sourced through competitive bids from public and private banks.
Private sector Reliance Industries and Essar Oil, who between them import over 40 per cent of crude oil shipped to India annually, will continue to buy dollars as per their company policies.
Rupee today hit a record low of 57.30, down Re 1 from yesterday`s close, on sustained capital outflows and strong demand from oil importers for the American currency. "Presently, oil companies seek dollar quotes from multiple banks, giving an exaggerated impression of their demand for dollar. This leads of strengthening of US dollar against the rupee," he said.
An an example, Chaturvedi said if the oil firms were in need of USD 50 million on a particular day, they would send enquiries for that amount to several public and private sector banks. This would give an impression as if the oil companies needed several times more than their actual requirement.
RBI had last month indicated that it may ask state-owned oil companies to buy dollars only from public sector banks, leading to strengthening of rupee. But the recovery was negated when the oil firms said they haven`t got any instructions.
Nation`s largest oil firm Indian Oil Corp (IOC) needs USD 3-4 billion every month for its oil imports, company Chairman R S Butola said. It buys a fifth of its daily forex need from State Bank of India and the remaining through bids from a panel of 16 banks.
Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) source their entire requirement through competitive bidding. BPCL and HPCL together need about USD 3 billion a month for oil imports.
Oil companies have agreed not to enter the market on a particular day when RBI feels there is excessive volatility and rupee was sharply depreciating.