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RBI deposit scheme may draw up to $100 billion by September
The RBI’s FCNR(B) deposit scheme has attracted about $41 billion so far and could reach $80-100 billion by September 30, Jefferies says, according to The Economic Times. Introduced on June 5, the…
The Story in Brief
The RBI’s FCNR(B) deposit scheme has attracted about $41 billion so far and could reach $80-100 billion by September 30, Jefferies says, according to The Economic Times. Introduced on June 5, the scheme offers concessional swaps to draw fresh foreign currency deposits from non-resident Indians and support the rupee.
Jefferies says the inflows could help stabilise the currency, which had touched 96.96 to the dollar in May and stood at 95.17 when its report was prepared. Foreign investors have also put $8.7 billion into Indian government bonds since early June, after interest income was made tax-free. Bank credit growth has reached 17-18% year on year, the report says.
The Indian Opinion
The easy story is that foreign inflows have solved the rupee’s problem, or that leveraged FCNR(B) returns are genuinely risk-free. Neither follows from the data. Jefferies reports NRI leverage of 9-19 times, which can magnify gains and losses, while currency stability also depends on trade, oil prices and global capital flows. The useful test is what happens to the rupee and deposits after the facility closes on September 30.
Source: economictimes.indiatimes.com
This story was synthesised by AI from the source linked above.
