The Reserve Bank of India’s (RBI) measures to attract foreign currency inflows have received a positive response, with around $10-11 billion mobilised so far through various channels, Financial Express reported.
Banks have shown strong interest in raising foreign currency funds through Foreign Currency Non-Resident (Bank) or FCNR(B) deposits, External Commercial Borrowings (ECBs) and Overseas Foreign Currency Borrowings (OFCBs).
The government and the central bank expect these routes to generate total inflows of around $80 billion.
The measures were announced by the RBI during its June 5 monetary policy review as part of efforts to attract foreign capital, strengthen the country’s balance of payments position and improve overall liquidity conditions.
Under the package, the RBI introduced a dollar-rupee swap facility for fresh FCNR(B) deposits and a concessional swap facility for eligible ECBs and OFCBs.
Fresh FCNR(B) deposits with maturities of three to five years are eligible under the scheme until September 30, while the concessional swap window for ECBs and OFCBs will remain available until December 31.
The central bank has also taken steps to make FCNR(B) deposits more attractive for investors.
Earlier this month, the RBI clarified that banks could provide loans against such deposits and create a lien on them, allowing depositors to access additional leverage.
Following the clarification, several banks have introduced loan facilities of up to 90 per cent against FCNR(B) deposits.
Interest rates offered on these deposits are currently attractive, ranging between 5.5 per cent and 7.1 per cent, increasing their appeal among investors.
RBI Governor Sanjay Malhotra is scheduled to meet chief executives of public and private sector banks on Tuesday to review the progress of the foreign currency mobilisation initiative.
The upcoming meeting follows discussions between the Finance Ministry and state-owned banks, where lenders reported strong investor interest in the scheme.
The RBI’s initiatives come amid efforts to strengthen external sector stability and attract foreign funds at a time of global economic uncertainty.
