RBI to close special FCNR(B) forex swap window ahead of schedule on August 31
The Reserve Bank of India (RBI) has announced it will close its special forex swap window for New Foreign Currency Non-Resident (Bank) deposits, known as FCNR(B), on August 31, ahead of schedule. This decision follows an "encouraging response" that has attracted a substantial $52.3 billion in deposits through this channel. However, banks can still engage in swaps against these deposits until September 11.
The RBI had initiated this special facility on June 8, enabling banks to mobilize fresh three-to-five-year FCNR(B) deposits and swap them at a concessional rate, effectively covering the entire hedging cost for the banks. The facility encompassed three components: FCNR(B) deposits, Overseas Foreign Currency Borrowings (OFCBs), and External Commercial Borrowings (ECBs).
FCNR(B) deposits constituted the majority, accounting for $52.3 billion, while OFCBs and ECBs made up $2.805 billion and $1.741 billion, respectively. The RBI introduced this special scheme as part of a broader initiative to encourage foreign capital inflows, enhance the value of the rupee, and bolster foreign exchange reserves.
The central bank also eased regulations for state-owned enterprises to borrow overseas and provided a concessional swap facility to stimulate ECBs by public sector firms.
Written by urgent.news from The Indian Express's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
