The Reserve Bank of India's temporary foreign exchange swap facility mobilized $40.816 billion through 31 July, with deposits raised from non-resident Indians accounting for almost 90% of the total, the central bank said on Saturday, 1 August.
Fresh Foreign Currency Non-Resident Bank, or FCNR(B), deposits contributed $36.725 billion. Overseas Foreign Currency Borrowings (OFCB) by authorized lenders added $2.575 billion, while External Commercial Borrowings (ECB) brought in another $1.516 billion. The figures were compiled from data submitted by authorized dealer banks.
The total was almost twice the $20.718 billion reported as of 17 July. Over the following two weeks, FCNR(B) deposits increased by $19.319 billion, while OFCB and ECB inflows rose by $605 million and $174 million, respectively.
The RBI announced the facility on 5 June and made it operational on 8 June as part of a broader set of measures intended to strengthen India's balance of payments and encourage foreign currency inflows. The window for fresh FCNR(B) deposits remains open until 30 September. Eligible OFCBs and ECBs can use the facility until 31 December.
FCNR(B) accounts allow non-resident Indians to hold term deposits with Indian banks in foreign currencies. Under the temporary program, banks can swap the principal raised through eligible three-to-five-year deposits with the RBI at an at-par dollar-rupee swap rate, reducing the currency hedging cost borne by lenders. The RBI has clarified that the swap covers the deposit principal but not the interest payable on it.
The central bank also permits banks to provide loans against deposits mobilized under the program and to mark a lien on them. The clarification, issued on 23 June, was followed by an increase in deposit mobilization, Reuters reported in July.
The RBI introduced the wider capital-flow package when higher crude-oil prices and foreign equity outflows were putting pressure on the rupee.
Other measures announced in June included changes to foreign investment limits in government bonds, tax relief for some overseas bond investors and steps to facilitate overseas fundraising.
The $40.816 billion reported by the RBI relates specifically to the FCNR(B), OFCB and ECB swap facilities.
Source: Press Insider