RBI to meet three state oil companies' dollar needs from October 12

The Reserve Bank of India has announced a dedicated dollar-selling facility for three state-run oil companies. It will start on October 12 and cover their entire daily demand for the US currency.

Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation will use the facility. In its October 10 release, the RBI said it would sell dollars to the companies through designated banks. The arrangement has no announced closing date and will continue until further notice.

The central bank made the decision after assessing current market conditions. Oil companies need foreign currency to pay for imported crude. The dedicated channel will let them obtain those dollars from the central bank, reducing their reliance on purchases in the foreign exchange market.

The Hindu linked the measure to rising oil prices and pressure on the rupee. More expensive imports increase dollar demand. The RBI's release did not specify a fixed amount of currency to be supplied or an exchange rate for the sales.