In the current scenario of continuous down slide of the rupee against the dollar, the Reserve Bank of India, in a bid to cub this volatility, has ordered state-owned oil companies to purchase their dollar requirement from a single public sector bank for every daily transaction. State oil refiners, who are the biggest buyers of dollars, agreed to implement the RBI order with immediate effect.
The RBI issued orders to Indian Oil Corporation, Hindustan Petroleum Corporation, Bharat Petroleum Corporation and Mangalore Refinery to stop seeking quotes from several banks for their $8-8.5 billion of monthly transactional requirement of U.S. dollar.
Why RBI doesn’t want oil firms to seek multiple quotes for their dollar requirements?
As felt by the RBI, Oil firms seeking multiple quotes for their dollar requirement adds to speculation on demand for the dollar and volatility in the local unit. The RBI has, therefore, asked oil firms to buy dollars from a single bank at their published reference rate.