Politics · India Bureau
RBI's FCNR deposit scheme closes early after banks raise $133 billion
Commercial banks mobilised substantial foreign currency deposits through the Reserve Bank of India's concessional swap window, prompting the central bank to wind down the scheme ahead of schedule. The early closure reflects strong interest from lenders seeking to shore up forex reserves amid volatile crude oil prices.
LSN India ·
The Reserve Bank of India's special Foreign Currency Non-Resident (FCNR) deposit scheme has concluded one month earlier than planned following robust participation from commercial banks. The banking sector mobilised $133 billion through the concessional swap window after the RBI opened it in June, demonstrating considerable appetite for the facility among deposit-raising institutions.
The early closure signals that the RBI's objective of augmenting foreign exchange reserves has been substantially achieved. The scheme, which offered banks attractive terms to mobilise overseas deposits, addressed immediate concerns about forex adequacy amid global economic uncertainties and fluctuating international crude prices.
The rupee's performance has reflected these foreign currency inflows, though gains have been tempered by international oil price movements. Spikes in crude costs have weighed on India's import bill and current account dynamics, offsetting some benefits from increased forex mobilisation through the deposit scheme.
The strong response from commercial banks underscores their confidence in the RBI's policy measures and their own ability to attract non-resident deposits on concessional terms. Financial analysts view the scheme's early completion as a positive indicator of both banking sector health and the effectiveness of the central bank's targeted interventions in managing forex pressures during volatile market conditions.