@arokh : which login are you using when you perform ftp ?
Just make a test. Do telnet instead of rlogin as the same user (probably "oracle" user). Then type "ulimit". I'm sure that you will see that this limit is 2097151, which means 1 Giga.
Just try it. If I'm right, then you should consider changing the max file limit for your user. root has to do that for this user (smit users, etc...).
Regards
Zorba
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