The Reserve Bank of India’s (RBI) dollar mobilisation measures announced in the June monetary policy have attracted inflows of $10-11 billion so far, according to sources.
The response from banks to raise foreign currency funds through the FCNR(B), external commercial borrowing (ECB) and overseas foreign currency borrowing (OFCB) routes has been encouraging, a person aware of the discussions between the government and the RBI noted. The authorities expect inflows of around $80 billion through these channels.
In its June 5 monetary policy, the RBI announced a comprehensive package that included a par dollar-rupee swap facility for fresh Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits and a concessional swap facility for eligible ECBs and OFCBs. The measures are aimed at attracting foreign capital, strengthening India’s balance of payments and boosting capital inflows.
Fresh FCNR(B) deposits with maturities of three to five years are eligible under the scheme until September 30, while the concessional swap facilities for ECBs and OFCBs will remain available until December 31.
Earlier this month, the RBI further clarified that banks could extend loans against FCNR(B) deposits and create a lien on them, allowing lenders to offer leverage and making the product more attractive to depositors. Most banks have since announced loan facilities of up to 90 per cent against such deposits. The rates are also attractive ranging between 5.5% and 7.1%.
RBI Governor Sanjay Malhotra is scheduled to meet chief executives of public and private sector banks on Tuesday, with discussions expected to review the progress of the scheme, according to three bankers.
The meeting follows discussions between the finance ministry and state-owned banks on Monday, during which lenders reported strong investor interest.
