3 weeks ago
RBI's FCNR Deposit Window May Close Early as Inflows Surge
The Reserve Bank of India looks after the country's money.
It made a special offer to Indians who live in other countries.
If they put their dollars into Indian banks, they could earn more interest and pay less tax.
Very many people wanted to join, so a huge amount of money came into India.
The money coming in might reach 50 billion dollars this week.
Because that is so much, the special offer may end early.
The planned end date was September 30, but leaders may close it sooner.
They worry that when all this money is due to be paid back, it will be hard to manage.
Something like this happened in 2013, and it caused problems later.
The leaders could open the offer again in the future if India needs more money.
The Reserve Bank of India's special window offering high tax-free returns on NRI dollar deposits may close before its September 30 deadline as inflows surge.
Inflows under the special FCNR(B) window could touch $50 billion this week, according to official sources.
FCNR(B) deposits accounted for $42.78 billion of the $47 billion mobilised through the new swap facility between June 23 and August 6.
India's foreign exchange reserves rose by $10.51 billion to $692.87 billion in the week ended July 31, the highest weekly gain since January 30.
The surge recalls the 2013 FCNR(B) drive that yielded around $26 billion but later created a foreign-exchange management challenge when deposits matured.
- Who
- The Reserve Bank of India and the Indian government, along with non-resident Indians depositing dollars through banks.
- What
- The special FCNR(B) deposit window offering high tax-free returns may close before September 30 as inflows surge toward $50 billion.
- Where
- India
- When
- Inflows surged from June 23 to August 6, with the window's deadline set for September 30, 2026.
- Why
- Robust inflows have raised concerns about reversal risks and the difficulty of managing large foreign currency liabilities when deposits mature.
Key facts
- Scheme
- FCNR(B) special window offering high tax-free returns on dollar deposits
- Scheduled deadline
- September 30, 2026
- Projected inflows
- May touch $50 billion this week
- Deposits mobilised (June 23 - Aug 6)
- $42.78 billion in FCNR(B) out of $47 billion total under the swap facility
- Other inflows
- $1.5 billion via ECBs and $2.8 billion via OFCBs
- Forex reserves gain
- $10.51 billion increase to $692.87 billion in the week ended July 31
- 2013 comparison
- Similar FCNR(B) drive yielded around $26 billion
Quotes
RBI source
An unofficial RBI official speaking about FCNR window inflows
“Nobody expected this volume of inflows in such a short time.”
financialexpress.com
Sources
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