BJP MP Subramanian Swamy today termed the USD 24 billion redemptions due to foreign investors this month as a “time bomb” and said the Finance Ministry has to cough up the amount guaranteed by RBI Governor Raghuram Rajan.
When the rupee had plunged to a life-time low in 2013 and was in a free fall due to the US ‘taper tantrums’, India had mobilised USD 26 billion through foreign currency non-resident bank account (FCNR-B) deposits by offering a special swap window for banks. The three-year deposits will mature this month.
“MoF has to cough up USD 24 billion to redeem the R3-guaranteed FCNR deposits of NRIs by Sept end. Time bomb,” Swamy said in a tweet.
R3 is the acronym he uses for references to Raghuram Rajan, whom he had on several occasions attacked for keeping interest rate high and purportedly hurting growth.
Rajan’s three-year term comes to an end on September 4. The governor had earlier said he expects there would be outflows of USD 20 billion to repay people on maturity of FCNR-B deposits.
Rajan announced the scheme on the evening of September 4, 2013, the day he took over, and it was considered to be his masterstroke to help stabilise the rupee.