RBI's early FCNR(B) deposit scheme closure 'data-driven' or a policy U-turn? Governor Malhotra explains
RBI Governor Sanjay Malhotra defended the FCNR(B) deposit scheme's early closure. He stated the decision was data-driven and a prudent calibration. This move aims to attract $80 billion into India's economy. The central bank cited stronger than expected dollar inflows for the adjustment. The RBI remains committed to managing exchange rate volatility and market conditions.
Reserve Bank of India (RBI) Governor Sanjay Malhotra clarified that the decision to advance the closure of the Foreign Currency Non-Resident (Bank) deposit scheme by a month was based on data and calibrated, rather than a policy U-turn. Speaking to the Financial Express, he emphasized that this move showcased the central bank's flexibility and reliance on data amid rapidly changing conditions.
Malhotra strove to defend the central bank's decision, describing it as a well-thought-out, prudent, and data-driven response to evolving circumstances.
Defending the central bank's decision, Malhotra stated that there were robust inflows and expectations of a healthy close moving forward. As of now, there is no proposal under consideration to close the scheme prematurely. The governor clarified that the terms "as of now" were used explicitly to deny a premature closure.
Responding to criticism, Malhotra highlighted that the central bank continues to assess a rapidly evolving situation. The policymakers made the decision from a position of strength, with the RBI expecting at least $80 billion in foreign currency assets through the FCNR(B), overseas foreign currency borrowings (OFCBs), and external commercial borrowings (ECBs) schemes.
Written by urgent.news from The Economic Times - Economy's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
