NRI deposits contribute $36.725 billion to RBI-backed foreign-exchange programme
MUMBAI: Foreign Currency Non-Resident Bank deposits emerged as the largest contributor to the Reserve Bank of India’s special foreign-exchange swap facility, according to data available through July 31.
The programme mobilized a total of $40.816 billion, compared with $20.718 billion as of July 17. Of the latest total, FCNR(B) deposits contributed $36.725 billion, accounting for nearly 90 per cent of the funds raised.
FCNR(B) accounts allow eligible NRIs to maintain term deposits in permitted foreign currencies. Because both the principal and interest are held in foreign currency, depositors are generally protected from fluctuations in the Indian rupee against the currency in which the deposit is maintained.
The RBI introduced the concessional swap arrangement in June to encourage foreign-currency inflows and strengthen India’s balance-of-payments position. The facility reduces hedging costs for participating banks and may enable them to offer more competitive deposit rates.
However, advertised rates vary between banks. NRIs should examine the deposit currency, maturity, lock-in period, premature-withdrawal conditions and any leveraged investment structure before committing funds
