The outflow also impacted the business — deposits plus advances — of banks in the third quarter of 2016-17. The country’s largest lender, State Bank of India, reported a 64.2 per cent drop in such deposits in 12 months from Rs 18,470 crore in December 2015 to Rs 6,609 crore at the end of December 2016.
Bank of Baroda said in the third quarter there were repayments of FCNR-B deposits of more than Rs 11,500 crore mobilised during the third quarter of 2013-14.
The rundown in local credit by its international branches in December 2016 was due to repayments of loans against FCNR(B) deposits.
Banks had raised nearly $34 billion between September and November 2013. Of the $34 billion, $27 billion was through FCNR (B) deposits, maturing mostly in three years. These were raised in 2013 to bolster India's foreign exchange reserves and contain the volatility of the rupee. Banks had swapped those dollars for rupees with RBI. The central bank, thereafter, bought forward-currency contracts.
On September 4, 2013, RBI had announced a window for swapping FCNR (B) dollar funds, mobilised for a period of at least three years, at a fixed rate of 3.5 per cent a year for the duration of the deposit.