Indians can now carry $3,000 in cash when they travel abroad

Source:5 May 2010, 1320 hrs IST,ET Bureau


MUMBAI: Foreign travellers can carry 50% more foreign exchange in cash than they could earlier. In a move towards further liberalisation of its foreign exchange policy, the Reserve Bank of India said it has increased the cash limit for foreign travel from $2,000 to $3,000 with immediate effect.

Authorised dealers and full-fledged money changers can now sell up to $3,000 to travellers proceeding to countries other than Iraq, Libya, Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States, without prior permission from RBI. In respect of these countries, Indians can carry up to $5,000 in cash. This ceiling was last reviewed in November 2001.

RBI has been consistently liberalising foreign currency regulations since 2000. The $3,000 ceiling applies only to the amount of cash that an individual can carry. Most credit card holders can spend up to their card limits during overseas travel. This spending is over and above the limit on carrying cash.

Foreign borrowing on the rise

The central bank has also released data on the extent of foreign borrowing by Indian corporates. This data shows that more and more Indian corporates are going for foreign loans. The total overseas borrowing is up 15% in FY10 to $21.4 billion, according to RBI data.

Indian corporates sought clearance for foreign currency borrowings of $4.3 billion in March, taking total sanctions for the year to $21.4 billion. While this 15% is more than the previous year’s $18.6 billion, it’s well below $31 billion sanctioned in FY08.

According to Edelweiss Securities economist Sidharth Sanyal, “This is a reflection of a revival of risk appetite among international borrowers. Moreover, the global liquidity conditions during the year (FY10) had improved because of which interest rates too ruled easy in most part of the year.”

A sizeable part of the money was for new projects and financing capex plans. Most of the loans were less than $100 million. During the year, there were only two big ticket sanctions for refinancing old loans. These were Tata Steel’s $1 billion loan and another $300 million by Reliance Industries. There were also a few large borrowings for investments in local businesses.

The data includes foreign currency convertible bonds (FCCBs) issued by local firms. Last year, the regulator had allowed companies to raise funds in the overseas markets to buy back outstanding FCCBs, data shows that such borrowings were less than $1 billion — a fraction of ECBs sanctioned during the year. FCCBs, which lost its sheen with the market downturn, is slowly picking up.