Raghuram Rajan-effect: Received $10.1 bn under forex swap window, says RBI

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Raghuram Rajan announced the opening of a swap window facility to encourage banks to lure NRI funds. Reuters Raghuram Rajan announced the opening of a swap window facility to encourage banks to lure NRI funds. Reuters
SummaryRaghuram Rajan had announced two schemes last month to attract foreign funds.

The positives flowing from new Reserve Bank of India (RBI) Governor Raghuram Rajan's policies are increasing. RBI today said it has received USD 10.1 billion under two schemes which were announced last month to attract foreign funds.

"The Reserve Bank has received till date USD 10.1 billion under the special concessional window for swapping Foreign Currency Non-Resident (Banks) Deposits and Overseas Foreign Currency Borrowings," the central bank said in a statement.

The schemes will remain valid till November 30.

RBI had come out with the special measures to arrest declining value of rupee, which was triggered by widening CAD, that touched a historic high of 4.8 per cent of GDP in 2012-13.

Soon after taking over as RBI Governor on September 4, Raghuram Rajan announced the opening of a swap window facility to encourage banks to lure NRI funds.

Under the facility, banks are permitted to swap fresh FCNR(B) dollar funds, mobilised for a minimum tenor of three years, at a fixed rate of 3.5 per cent per annum for the tenor of the deposit.

Also, RBI relaxed norms for banks and allowed them to raise capital abroad to the tune of 100 per cent of their Tier I (equity) capital.

The rupee had plunged to life-time low of 68.85 against the dollar on August 28 but has recovered substantially. It was trading around 61.58 to a dollar.

As regards the CAD, it is likely to be better than the initial estimate of 3.7 per cent of GDP or USD 70 billion in the current fiscal due to slump in gold imports and improvement in merchandise exports.

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